Oil Prices Drop, US Affirms Iran Ceasefire Remains in Place
Oil prices weakened on Tuesday (May 5) after US Defense Secretary Pete Hegseth affirmed that the ceasefire between the United States and Iran remains in place. The statement eased market fears that the Middle East would return to full-scale war following the attack on the United Arab Emirates earlier this week.
Brent crude fell more than 2% to around US$111.45 per barrel, while West Texas Intermediate (WTI) fell more than 3% to around US$102.65. This decline came after oil prices previously surged more than 4% due to escalating tensions when Iran launched drones and missiles at the UAE, and Washington declared it had sunk an Iranian vessel in the Strait of Hormuz.
The Chairman of the US Joint Chiefs of Staff, General Dan Caine, stated that the Iranian attack remained “below the threshold” for resuming major combat operations. Hegseth also emphasized that the ceasefire is not over and the US government continues to monitor the situation closely.
He added that the final decision regarding further escalation rests with President Donald Trump. Currently, the market assesses that the risk of major conflict has eased somewhat, resulting in a reduction in the geopolitical risk premium on oil prices.
However, uncertainty remains high as the Strait of Hormuz remains a sensitive point in the conflict. Any new developments related to shipping lane security operations in the region have the potential to further trigger global energy price volatility.
Source: Newsmaker.id
