Oil Rises Despite Risk of Prolonged Supply Disruptions
Oil prices strengthened as the market assessed the potential for prolonged supply disruptions amid the US-Iran standoff. Brent rose above US$109/barrel, while WTI traded around US$107/barrel, as attention returned to the risk of disrupted energy flows from the Middle East.
Sentiment hardened after a Wall Street Journal report that US President Donald Trump had asked aides to prepare for a longer blockade of Iranian ports, considering the risks to the US lower than continuing military escalation or exiting the conflict without a deal limiting Iran's nuclear activities. The shift in market expectations toward a longer conflict has brought supply issues back to the center of the narrative.
On the short-term fundamental front, the market also responded to US government data (published Wednesday) showing a deep decline in crude oil and key refined product stockpiles. The same data noted higher export demand, pushing US crude oil exports to a record above 6 million barrels per day, emphasizing the role of US supply as a buffer against disruptions in flows from the Persian Gulf region.
The deadlock in peace talks is said to still be holding back opportunities to normalize the flow of crude, natural gas, and oil products from the Persian Gulf, which has been "effectively" halted since the conflict began in late February. In this context, the strengthening of oil increases the transmission channel to global inflation through rising energy costs (gasoline, diesel, aviation fuel), which in turn could increase market sensitivity to monetary policy direction.
Going forward, the market is likely to remain reactive to signals regarding the duration of the deadlock and any indication of the reopening of energy logistics routes, including the Strait of Hormuz. Variables to monitor include developments in US policy regarding the blockade, the dynamics of US-Iran negotiations, the status of supply flows from the Persian Gulf, subsequent US stockpiles and export data, and the response of refined product prices, which reflect demand and supply pressures. (gn)*
Source: Newsmaker.id
