Oil Holds High, US Increases Pressure on Iran
Oil prices held steady as investors monitored the next steps in the prospects for peace talks over the Iran war, while the Strait of Hormuz remained nearly impassable, prolonging supply disruptions that have rocked global markets. Brent held around $111 a barrel after rising 2.8% on Tuesday, while WTI hovered above $99.
US President Donald Trump said Iran had asked the US to lift its naval blockade of the strait as the two sides negotiated an end to hostilities that have squeezed energy supplies from the Middle East. However, a Wall Street Journal report said Trump also instructed his aides to prepare for a prolonged blockade scenario, with the strategy of stifling Iran's economy and oil exports by restricting shipping in and out of ports.
Although the ceasefire has held since early April, the deadlock in talks has led the market to assess that supply risks have not abated. Kpler believes Iran is rapidly running out of oil storage capacity, which could accelerate production cuts. Michelle Brouhard of Kpler believes the impasse could last for weeks, with a tipping point likely coming when the global market can no longer tolerate the supply shortage or when Iran demands the return of export access.
Mediators are said to expect Iran to submit a revised proposal within days, while Trump has said Tehran wants the oil shipping route opened as soon as possible. Since the conflict began in late February, Hormuz has been virtually impassable, cutting off the flow of oil, natural gas, and petroleum products, and fueling fears of an inflation crisis; the IEA has called it the largest supply shock in history.
The conflict has also triggered other geopolitical shifts in energy, including the United Arab Emirates' decision to withdraw from OPEC next month after six decades, citing the need for a more agile response amidst supply shortages. On the enforcement side, the US is increasing pressure through sanctions: OFAC warned financial institutions of sanctions risks related to independent Chinese refineries, and the US imposed sanctions on Hengli Petrochemical (Dalian) for alleged ties to Iran, even though the company denies any trade with Iran.
The US has also warned of sanctions risks related to paying Iran a "toll" to pass through Hormuz, as Tehran reportedly seeks to formalize a cross-strait payment system through national regulations. Analysts believe market attention will remain focused on supply developments and geopolitical signals from the Gulf region, with the underlying trend remaining bullish but with the potential for sharp intraday swings. In recent trading, June Brent fell 0.2% to $111.03 (12:02 Singapore time), July Brent fell 0.3% to $104.06, and June WTI fell 0.7% to $99.28. (asd)
Source: Newsmake.id
