The Trump administration has told mediators it will not return to the June memorandum of understanding with Iran, leaving diplomats without a framework to reopen the Strait of Hormuz. Brent crude climbed above $88 a barrel on the report, and Trump now plans to meet refiners and fuel retailers as gasoline costs weigh on midterm politics.
Brent crude rose 1.9% to $88.60 a barrel, while U.S. West Texas Intermediate gained 1.8% to $83.66, after the Wall Street Journal reported Thursday that Washington had repeatedly told mediators it has no interest in reviving the interim deal it signed with Iran in June. Both benchmarks were still down more than 5% for the week.
Hormuz framework collapses
The MOU was signed by President Trump at the Palace of Versailles, with Vice President JD Vance helping negotiate it, and it aimed to reopen the Strait of Hormuz and start talks on Iran's nuclear program in exchange for sanctions relief. But it collapsed within weeks after Iran began attacking ships to assert control over the waterway, and Trump has since turned to a policy of maximum economic pressure instead.
University of Birmingham researcher Umer Karim, quoted by Reuters, said: "The old MOU is essentially dead in all aspects." Shuttle diplomacy from Pakistan, Oman and Qatar has so far failed to produce a breakthrough, and Iran maintains that reopening the strait depends on Washington upholding the original agreement's terms.
The U.S. launched "Operation Economic Outcast" on August 25, sanctioning nearly 60 entities and expanding secondary sanctions to five sectors, including digital assets, gold and shipping. A tanker was struck by an unknown projectile in the strait on Thursday. Friday marks the six-month anniversary of the strikes on Iran.
Crude stockpiles still building
Oil had also been pressured earlier in the week by U.S. government data. The Energy Information Administration said commercial crude stocks excluding the Strategic Petroleum Reserve rose by 100,000 barrels in the week of August 21, to 428.9 million barrels, versus expectations for a 597,000-barrel build, while total inventories including the SPR fell to their lowest level since April 1984.
Trump turns to refiners as midterms near
Trump is expected to meet U.S. refiners and fuel retailers next week to highlight efforts to bring down gasoline prices, as the Iran war squeezes consumers ahead of November's midterms. Expected attendees include Valero Energy, Marathon Petroleum and PBF Energy, Reuters reported, citing sources familiar with the plans.
Republicans are defending narrow congressional majorities, and the war has grown increasingly unpopular. Reuters/Ipsos polling shows Trump's approval rating has fallen to 33%, with only 31% approving of the conflict.
U.S. regular gasoline has held above $4 a gallon, roughly $1 more than a year ago. The strait's disruption has cut into flows that once carried 20% of the world's oil.
Sources: Investing.com, Investing.com, Investing.com
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