Oil Rises After Iran Denies Talks with US
Oil prices rose on Tuesday (March 24th) as the market reassessed supply risks after Iran denied talks with the United States to end the Gulf War. This denial contradicted US President Donald Trump's earlier statement that a deal could be reached soon, bringing the previously faded "war premium" back into prices.
Brent futures rose about $4, or 4%, to $103.94 per barrel at 04:00 GMT. WTI futures rose $3.49, or 4%, to $91.62 per barrel.
The previous day, oil prices had fallen more than 10% after Trump ordered a five-day delay in attacks on Iranian power plants, while saying the US had spoken with Iranian officials (without elaborating) and found "major points of agreement." However, on Tuesday, the market reversed course, assessing that the risks had not disappeared after Tehran denied any contact.
"By delaying plans to attack Iranian power plants by five days, the US essentially siphoned off most of the 'war premium' from oil prices," said Tim Waterer, chief market analyst at KCM Trade. "Today's modest bounce is more like the market is trying to get back on its feet. Traders are aware that even with the missiles halted, the Strait of Hormuz is far from completely safe."
The war has nearly halted shipments of about a fifth of the world's oil and LNG through the Strait of Hormuz. However, two tankers bound for India reportedly passed through on Monday, signaling a "slight" flow is beginning to move, although most traffic remains blocked.
Iran has rejected claims of contact with Washington, calling them an attempt to manipulate financial markets. Iran's Revolutionary Guard Corps (IRGC) has claimed to have attacked US targets and called Trump's comments an "outdated psychological operation." The tensions surrounding these statements have further exacerbated market uncertainty.
Macquarie believes that while tensions may ease after Trump's announcement on Monday, prices could potentially have a "floor" in the $85-$90 range and are likely to move back towards the $110 area until the Strait of Hormuz is fully restored. Even if the strait remains effectively closed until the end of April, Macquarie warned that Brent could still reach $150 per barrel.
On the ground, attacks on energy infrastructure are also reportedly continuing. A gas company office and a pressure relief station were reportedly hit in the city of Isfahan, while a projectile hit a gas pipeline supplying a power plant in Khorramshahr, according to the Fars news agency.
To ease the supply squeeze, the US temporarily eased sanctions on Russian and Iranian oil already at sea. Industry sources said traders then offered Iranian oil to Indian refineries at a premium over ICE Brent. Meanwhile, IEA Executive Director Fatih Birol said the agency is consulting with Asian and European governments regarding the possible release of additional strategic reserves “if needed.”
Despite the stabilization efforts, the market is still bracing for disruptions until at least April, which is keeping Brent supported by a risk premium and maintaining inflationary pressures, said Priyanka Sachdeva, senior market analyst at Phillip Nova. At the Houston conference, energy executives and ministers also highlighted the long-term impact of the US-Israel war against Iran on the global economy, although US Energy Secretary Chris Wright downplayed the severity of the crisis.
Newsmaker's Bottom Line: After the crash, oil rebounded as Iran's denial revived risk premiums. As long as shipping flows in Hormuz remain unregulated and attacks on energy assets continue, oil will remain volatile and move heavily influenced by headlines.
Source: Newsmaker.id
