UPDATE 4-Oil prices rise as US-Iran peace talks stall

Oil prices rose on Monday as peace talks between the U.S. and Iran stalled and shipments through the Strait of Hormuz ‌remained limited, keeping global oil supplies tight. The Brent crude benchmark was up 96 cents, or 0.9%, at $106.29 a barrel by 1212 GMT after reaching $108.36 earlier in the session for its highest in three weeks. U.S. ‌West Texas Intermediate gained 63 cents, or 0.7%, to $95.03.

Brent and WTI climbed nearly 17% and 13% ‌respectively last week for their biggest weekly gains since the start of the war. Efforts to bridge gaps between the United States and Iran have not halted, sources from mediator Pakistan said, despite the failure of face-to-face diplomacy after Donald Trump called off ⁠a trip ​by his envoys and ⁠told Iran to phone when it wants to talk.

"The diplomatic stand-off means that every day 10-13 million barrels of oil fail ⁠to get to the international market, worsening an already tight oil balance. Therefore, there is only one direction for oil ​prices to go," said PVM Oil Associates analyst Tamas Varga. Tehran has largely closed the Strait ⁠of Hormuz while Washington has imposed a blockade of Iran's ports. Traffic through the waterway remained limited, with only one oil products tanker ⁠entering ​the Gulf on Sunday, Kpler shipping data showed.

Goldman Sachs raised its oil price forecasts for the fourth quarter to $90 a barrel for Brent crude and $83 for WTI, citing reduced output from the Middle ⁠East. "The economic risks are larger than our crude base case alone suggests because of the net upside ⁠risks to oil prices, unusually ⁠high refined product prices, products shortages risks and the unprecedented scale of the shock," GS analysts led by Daan Struyven said in a note on Sunday.

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