Oil climbs 5% as Iran, US both demand compensation and Hormuz hopes fade

Iran said it was nearing a final pact with Oman to define new shipping lanes through the strait but repeated that the U.S. must meet other conditions, including compensation and an end to sanctions and military threats before the strategic waterway is reopened.

Iran and the U.S. are not currently engaged in talks. Tehran will not start them while Washington is in breach of an interim deal signed in June, Iranian Foreign Minister Abbas Araqchi said on Sunday.

"Crude futures (are) seeing gains in the early trade as the US/Iran peace deal looks to be delayed along with further strikes from Ukraine hitting Russian refineries and tankers in the Black Sea," said Dennis Kissler, senior vice president of trading at BOK Financial.

"With Iran making the added demands, most traders feel near term, tighter supplies are more probable for longer," Kissler added.