Oil Prices Edge Higher as US-Iran Hormuz Talks Stall and Saudi Arabia Reroutes Exports Through Egypt

Crude oil prices were little changed to modestly higher on August 12 as traders balanced a deadlock in US-Iran negotiations over the Strait of Hormuz against a large build in US oil inventories and softening demand forecasts from the IEA. WTI had surged roughly 5% earlier in the week, settling around $82.13 a barrel, and Brent near $87.72, on fears the strait would remain blocked, but gains were capped as a deal failed to materialise. President Trump described the US as only semi-negotiating with Iran, saying Washington would rely on its naval blockade rather than new airstrikes to pressure Tehran.

Energy sector stocks moved up alongside futures. The precise volume of oil still flowing through the strait remains contested: tanker trackers put non-Iranian flows at roughly 5 million barrels per day, while the US government estimates closer to 9 million barrels per day, suggesting the waterway is partially rather than fully blocked. Separately, Saudi Arabia has begun rerouting oil exports through Egypt's Sumed pipeline to Mediterranean terminals to avoid Houthi attacks in the Red Sea, after Saudi exports via the Bab el-Mandeb strait fell nearly 90% to 1.3 million barrels in the week of August 3 compared with 11 million barrels the week before the Houthi embargo.

Analysts at Jefferies warned that if the Hormuz deadlock extends into the following week, market moves could become far less benign, with China's rising crude imports and continued Houthi attacks on Saudi infrastructure cited as additional upside risks to prices.