An aerial view taken from an helicopter during a media visit shows five platforms over the Johan Sverdrup oil field in the North Sea some 140 kilometres west from the town of Stavanger, Norway, on December 3, 2019. (Photo by Tom LITTLE / AFP) (Photo by TOM LITTLE/AFP via Getty Images)

Tom Little \| Afp \| Getty Images

Oil prices were lower on Monday after Iran's Foreign Ministry spokesman Esmail Baghaei said negotiations with the U.S. could be pursued based on national interests.

Speaking to reporters at a news conference, Baghaei said intermediaries had continued to exchange messages with Iran amid the latest round of U.S. strikes and American military casualties.

Investors were also digesting news that the Houthi militants in Yemen declared a maritime embargo against Saudi Arabia.

International benchmark Brent crude for September delivery was last seen trading 0.3% lower at $87.88 per barrel, erasing gains it had made earlier in the session when it topped $90. U.S. West Texas Intermediate crude for August delivery, meanwhile, dipped 0.5% at $82.07, also reversing earlier gains.

The latest moves come after the U.S. military confirmed a third American service member had been killed in recent operations, while investigators recovered unidentified remains near the site of an Iranian attack in Jordan that had previously left two U.S. personnel dead and another missing.

American forces completed a ninth consecutive night of strikes against Iranian targets. "The strikes will continue degrading Iranian military capabilities used to attack commercial vessels and civilian mariners transiting the Strait of Hormuz," the U.S. Central Command said in a statement on X.

The renewed hostilities have revived concerns about the security of one of the world's most important oil transit routes. The Strait of Hormuz typically handled around 20% of the world's oil traffic before the war. Shipments have fallen sharply amid the latest cycle of attacks.

U.S. Centcom has targeted Iranian coastal surveillance and air defense systems, maritime assets, as well as missile and drone storage facilities in its strikes. American forces have also struck Islamic Revolutionary Guard Corps units linked to Friday's attack on U.S. personnel in Jordan.

Iran's Revolutionary Guard has claimed that it maintains full control over the Strait of Hormuz and renewed its pledge that "not a single drop of oil, gas, or chemical fertilizer" will pass through the waterway, according to Iran's semi-official Tasnim news agency.

The Houthis move could exacerbate the oil supply disruption stemming from the Strait of Hormuz. The group has repeatedly threatened to close the Bab el-Mandeb Strait, which has been used as an alternative to the Strait of Hormuz by Saudi Arabia during the conflict in the Middle East. It is unclear if the announcement by the Houthis today amounts to a closure of that passageway or not.

Gas prices back at $4 a gallon

U.S. gasoline prices notched $4 per gallon again on Monday, according to the American Automobile Association, amid persistent instability facing traffic on the strategically vital Strait of Hormuz.

The national average price for regular gasoline was last seen at $4 or higher on June 17, when the U.S. and Iran signed an interim agreement intended to reopen the strategically vital waterway and stop the fighting.

Amrita Sen, founder and director of research at Energy Aspects, said a substantial slowdown in shipping traffic through the Strait of Hormuz and depleted global inventories could push oil prices to more than $100 per barrel.

"Do we think prices should or could go to triple digits? Absolutely. Remember the market is short as well, right? It was a market that went heavily short as soon as Hormuz was starting to reopen, that's why we went into the seventies. So, those shorts are still covering as we speak and I think that's one of the other momentums you are starting to get," Sen told CNBC's "Access Middle East" on Monday.

"The market is still quite complacent despite the price increase we have seen. I have macro funds telling me, 'well, you know, we have had this before, we didn't really go up much above $100, what's so different this time, we have AI to worry about,'" Sen said.

"So, this is still not front and center for most people in the market."