A mutual demand for compensation renders successful peace negotiations unlikely: File Image/Pixabay .

With caution being the operative word in the oil investment community, traders on Monday continued to express frustration for the on-going will they/won’t they dance of the U.S. and Iran with regard to a peace agreement by causing crude to rise 3.7 percent.

That percentage resulted in Brent by mid-session topping $86.69 and West Texas Intermediate rising to $81.80 per barrel, still a modest level compared to July’s swings of between $72 and $102, driven entirely by war-linked sentiment.

Bloomberg noted, “Higher oil prices push inflation upward, and the main event for Wall Street this week will likely be Wednesday’s update on how bad inflation was last month... Economists expect it to show inflation slowed to 3.4 percent from 3.5 percent in June.”

A slowdown would mean less pressure on the U.S. Federal Reserve to raise interest rates.

Tim Waterer, chief market ‌analyst at KCM Trade, told media, “Each day that passes without a breakthrough is making traders a little more cautious.”

From a strategic viewpoint, U.S. president Donald Trump’s silence regarding Iran’s demand for major concessions before it considers reopening the Strait of Hormuz means the Islamic republic’s ports will continue to be blocked, thus furthering economic chaos and, possibly, weakening the regime beyond repair.

It seemed unlikely that Washington would agree to any of Iran’s demands, which include easing sanctions against Tehran and paying war reparations: “Even if an agreement is eventually announced, history suggests these understandings can prove fragile,” Waterer said.

Indeed, just as Tehran doubled down in the impasse over the Strait, so too did Trump, by stating he would now require compensation from Iran for “all of the people that they have killed and gravely wounded with their roadside bombs and many conflicts, for which they are famous” if peace talks were to be successful.

He added, “I have instructed my representatives to put this firmly into any, and all, future negotiations.”

In other war-related oil news on Monday, Egypt and Libya were reportedly  nearing a deal to build an 800 kilometre oil pipeline (costing in excess of $1 billion) connecting Tobruk with Alexandria, for Libyan crude production to reach Egyptian refineries directly without relying on tanker shipments.

The pipeline plan follows talks between the two countries to expand cooperation in oil refining, natural gas and electricity.