Oil prices fell more than $2 in choppy trade on Monday, as investors awaited clarity on the status of talks between the US and Iran and remained wary about sustained supply losses due to shipping disruptions.
Brent crude futures fell $1.92, or 1.76%, to $107.11 a barrel at 1037 GMT. US West Texas Intermediate crude futures were trading down 1.82%, or $2.03, at $109.50 per barrel.
The pricing moves in Asia trading on Monday were dwarfed by an 11% surge for WTI and an 8% rise for Brent during the previous trading session on Thursday, the biggest absolute price increase since 2020.
The US and Iran received the framework of a plan to end hostilities, but Iran rejected immediately reopening the Strait of Hormuz, after President Donald Trump threatened to rain "hell" on Tehran if it did not make a deal by the end of Tuesday.
Iran also said it has formulated its positions and demands in response to recent ceasefire proposals conveyed via intermediaries.
The Strait of Hormuz, which carries oil and petroleum products from Iraq, Saudi Arabia, Qatar, Kuwait and the United Arab Emirates, remains largely closed due to Iranian attacks on shipping after the war began on February 28.
"Not being able to open the Strait of Hormuz is becoming more a question of political victory," said Mukesh Sahdev, founder and CEO at consultancy XAnalysts.
Because of the Middle East supply disruptions, refiners are seeking alternative sources for crude, particularly for physical cargoes in the US and Britain's North Sea. Some vessels, however, including an Omani-operated tanker, a French-owned container ship and a Japanese-owned gas carrier, have passed through the Strait of Hormuz since Thursday, shipping data showed, reflecting Iran's policy to allow passage for vessels from countries it deems more friendly.
Additionally, spot premiums for US West Texas Intermediate crude have jumped to all-time highs as competition between Asian and European refiners for supply heats up to replace Middle Eastern oil flows disrupted by the war, industry sources told Reuters.
The war threatens to linger on as Iran has officially told mediators it is not prepared to meet with US officials in Islamabad in the coming days and efforts to produce a ceasefire have reached a dead end, The Wall Street Journal reported on Friday.
On Sunday, OPEC+, consisting of some members of the Organization of the Petroleum Exporting Countries and allies such as Russia, agreed to a modest rise of 206,000 barrels per day for May.
However, that decision will largely exist on paper as several of the group's key producers are unable to raise output due to the war.
Meanwhile, Russian supply has been disrupted recently by Ukrainian drone attacks on its Baltic Sea export terminals. Media reports on Sunday said its Ust-Luga terminal resumed loadings on Saturday after days of disruptions.
Exports from the Black Sea port of Tuapse are set to rise to 794,000 metric tons in April, up 8.7% on a daily basis from 755,000 metric tons planned for March, according to two traders and Reuters calculations.
