Oil Markets Volatile, Focus on US Ultimatum on Iran
Oil prices extended gains for a third day as US President Donald Trump increased pressure on Iran ahead of a Tuesday evening deadline. Trump's remarks fueled a rise in geopolitical risk premiums, amid concerns about potential supply disruptions from the Gulf region.
West Texas Intermediate (WTI) traded above US$113 per barrel, after closing at its highest level since June 2022 on Monday. Meanwhile, Brent ended just below US$110 per barrel, reflecting strengthening bullish sentiment in global energy markets.
Trump said Monday that talks with Iran were "going well," but he also emphasized that reopening the Strait of Hormuz was a "very big priority." He outlined the consequences Iran would face if a deal was not reached by Tuesday's 8 p.m. US Eastern Time deadline.
Iran warned it would respond to a possible attack by escalating attacks on energy infrastructure in the Gulf region. This scenario is seen as potentially exacerbating the global fuel supply crunch and increasing the impact on the global economy, especially as the conflict is said to be entering its sixth week and triggering significant supply shocks.
Enverus analyst Carl Larry assessed that Trump "hasn't backed down from his previous statements," so the market still sees a high risk of escalation. He said the situation is approaching a decisive stage, but the final outcome could be unfavorable if it leads to military action.
From the physical market, short-term supply concerns are also evident in the sharp widening of the WTI prompt spread, the difference between the two nearest contracts, which approached US$15.50 per barrel on Monday. This widening was triggered by expectations of tighter US supplies, as foreign buyers increased purchases of American crude, while the May WTI contract rose 1% to US$113.50 per barrel in morning trading in Singapore.
Oil prices rose for a third straight day, driven by escalating US-Iran tensions ahead of Tuesday's 8 p.m. ET deadline.
5 Key Points:
- WTI broke above US$113/barrel (the highest since June 2022), while Brent approached US$110/barrel.
- Trump stated that negotiations were "going well," but continued to emphasize the Strait of Hormuz as a top priority and issued a stern threat if no agreement was reached by the deadline.
- Iran warned that it would retaliate by escalating attacks on energy infrastructure in the Gulf, which could exacerbate the global supply crisis and weigh on the world economy.
- Indications of a tightening market were seen in the WTI prompt spread, which briefly approached US$15.50/barrel, reflecting concerns about tightening US supplies as foreign buyers sought American crude. (asd)
Source: Newsmaker.id
