Oil Gains Slightly on Optimism for a US-Iran Deal
Oil prices edged higher after falling sharply in the previous session following President Donald Trump's statement that the US was in the "final stages" of negotiations with Iran. Brent crude traded around $105.94 per barrel, while West Texas Intermediate (WTI) rose to $99.24 per barrel.
Trump's comments fueled hopes of a deal between Washington and Tehran that could soon reopen energy flows through the Strait of Hormuz, a strategic waterway that had been closed for some time. This expectation lowered risk premiums and exerted modest pressure on oil prices, which had previously surged due to supply disruptions.
Despite the optimism for a peace deal, conflicting news about the negotiations continues to weigh on the market. Oil prices remain more than 40% higher than before the conflict began in late February, with traders anticipating a sudden de-escalation and the reopening of the oil pipeline holding millions of barrels in the Persian Gulf.
Rabobank energy expert Joe DeLaura emphasized that the physical oil market remains uncertain, as distribution from the Persian Gulf to its destination can take up to 55 days, keeping global inventories stretched during this period. Sultan Al Jaber, CEO of Abu Dhabi National Oil Co., added that Middle East oil flows will not fully recover until 2027 even if the conflict ends.
Global crude and product inventories are also shrinking rapidly to offset supply disruptions, while U.S. crude stocks fell by about 7.9 million barrels last week. Early signs of increased flows through the Strait of Hormuz are starting to reduce risk premiums, although Iran's claim of 26 vessels passing through the passage remains questionable.
Trump reiterated that a deal will be made, or the U.S. will take decisive action if Iran rejects the terms. Iran is currently reviewing a new U.S. draft in response to the 14-point proposal and has warned of potential retaliation outside the Middle East if an attack is carried out.
Key Points:
- Oil rises slightly: Brent $105.94, WTI $99.24.
- Optimism about a U.S.-Iran deal boosts energy flows through the Strait of Hormuz.
- The market remains uncertain due to conflicting negotiating news.
- Global oil inventories are being squeezed, physical distribution remains delayed.
Investors are monitoring Iran's response and the potential for conflict escalation. (asd)*
Source: Newsmaker.id
