Oil prices, stocks surge as Hormuz closure drags on

US petrol prices dropped nine cents last week but could again surge if the strait closure continues, analysts warn.

Oil prices are surging as hopes dwindle that the Strait of Hormuz may reopen. The increase follows a dip last week as Tehran called on the United States to meet several demands, including ending military threats and sanctions, as well as providing compensation in order to reopen the strategically important waterway.

On Monday, Brent crude futures rose more than $2 amid Iran’s push. Brent crude futures are up 3.3 percent for the day at $84.64 per barrel. US West Texas Intermediate crude futures are also on the upswing, rising 3.1 percent to $80.63.

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“Although the strait is still essentially closed, oil is currently trading at $80 to $85 per barrel, reflecting hope for a solution in near time,” SEB Research analysts said in a note to investors.

The increase follows a slight reprieve last week, with both major benchmarks falling seven percent amid hopes that the two sides were nearing a deal that would reopen the strait.

As a result, US consumers saw some relief at the pump. US petrol prices fell nine cents over the last week, according to the American Automobile Association (AAA), which tracks daily petrol prices. On average, a gallon (3.78 litres) of petrol costs $4.00, down from $4.09 last week.

But that could change soon, according to Patrick De Haan, head of petroleum analysis at GasBuddy.

“With the strait remaining closed, upward pressure on fuel prices could return quickly, and if things don’t go well, the national average could climb to its highest level ever recorded this late in the calendar year,” De Haan said.

“For now, enjoy the dip, but keep a close eye on how the strait situation develops in the days ahead.”

Oil and gas stocks are also increasing in US markets as the trading week begins. ExxonMobil stock rose 2.9 percent in midday trading. Chevron was up 3.1 percent, while BP climbed 2.1 percent and Shell 1.2 percent higher. ConocoPhillips rose 2.7 percent since the market opened.