Oil prices rise as investors weigh lack of progress in Middle East negotiations

By Anushree Mukherjee and Robert Harvey

LONDON, Aug 27 (Reuters) – Oil prices rose on Thursday, as traders weighed prospects for global supplies in the wake of the ongoing Iran war as Washington confirmed it was not currently in talks with Tehran despite diplomatic efforts by other countries.

Brent crude futures were up $1.16, or 1.32%, at $89 a barrel at 1332 GMT. West Texas Intermediate crude futures gained 52 cents, or 0.63%, to $82.75.

Prices fell in the last three sessions as investors weighed whether a deal could see an increase in oil flows out of the Middle East Gulf. But a lack of progress throughout the week, combined with continually restricted flows, could have prompted an adjustment of market views on Thursday, UBS analyst Giovanni Staunovo said.

The White House said on Thursday that no negotiations are happening between the U.S. and Iran, but that all options remain on the table.

“No negotiations are happening right now, and this will continue until the president feels that maybe they come to the table in a meaningful way. We have not seen that yet,” White House press secretary Karoline Leavitt said in an interview with Fox News.

Qatar’s prime minister visited Tehran on Thursday in a bid to relaunch diplomatic talks to end the U.S.-Israeli conflict with Iran, on the eve of the conflict’s six-month anniversary and as traffic through the vital Strait of Hormuz route for Gulf energy exports remains restricted.

Meanwhile the U.S. and Iran traded recriminations over Washington’s promise to increase economic pressure on Iran.

The U.S. on Monday announced the “toughest sanctions in history” on Iran, taking economic measures that Treasury Secretary Scott Bessent suggested would lessen the need for new major military operations.

Ebrahim Azizi, the head of the Iranian parliament’s national security committee, said the sanctions were an “inhumane and hostile act” which nonetheless had lost their effectiveness.

“The biggest risk right now is that optimism around a deal proves premature and negotiations stall or break down again. That would quickly re-inject risk premium into prices,” KCM chief market analyst Tim Waterer said.

“At the heart of the dispute remains Iran’s nuclear programme and that is unlikely to be resolved quickly … Iran also understands the importance of its geographical position and the leverage that the Strait of Hormuz provides, so the risk of prolonged uncertainty remains,” said Priyanka Sachdeva, head of market insights at Phillip Nova.

The Strait of Hormuz handled about one-fifth of global daily oil and liquefied natural gas supplies before the conflict began in late February. 

(Reporting by Robert harvey in London, Laila Kearney in New York, Emily Chow in Singapore and Anushree Mukherjee in Bengaluru. Editing by Thomas Derpinghaus, Conor Humphries, Mark Potter and Louise Heavens)