Oil Holds Strong, Iran Blockade Maintains Hormuz Risk Premium
Oil prices held steady for a second weekly gain after US President Donald Trump reiterated his continued naval blockade of Iranian ports, fueling concerns that the Strait of Hormuz would not be reopened soon. Brent for July delivery rose 1.5% to US$112.02 per barrel at 9:09 a.m. Singapore time, while WTI for June rose 0.9% to US$105.98.
This rally saw WTI rise about 12% for the week, amid a negotiation deadlock that has prolonged the near-closed sea lane that carried about a fifth of the world's crude oil before the war. Supply uncertainty has triggered sharp price swings and pushed the futures curve flatter, reflecting a market focus on near-term supply risks.
From Tehran, Iran's supreme leader, Mojtaba Khamenei, stated that a deal with the US was unlikely, reaffirmed that he would not give up nuclear or missile technology, and hinted that Iran would retain control of the strait. The combination of political statements and logistical conditions in Hormuz continues to maintain a risk premium in oil prices.
Market liquidity was also thin during the Asian session due to the Labor Day holiday for many global markets, including China, Singapore, Germany, France, and Brazil. Sub-normal volumes tend to increase intraday volatility, especially when the market reacts to geopolitical headlines.
Amid the price surge, ConocoPhillips warned of the potential for "critical shortages" of oil for several importing countries as the war enters its third month. CFO Andy O'Brien assessed that supply pressures could worsen starting in June, as the "grace period" for tankers that left the Persian Gulf in late February has now expired after all cargoes have arrived at their destinations.
Signals of physical tightening are also evident in the narrowing gap between paper and physical prices, while US crude oil exports surged to a record last week as global buyers seek to replace lost barrels from the Middle East. The market is now monitoring the smooth flow of tankers, indications of shortages in importing countries in June-July, as well as the continued impact of the energy surge on inflation and central bank responses. (asd)
Source: Newsmaker.id
