Oil Surges After Iran Confirms Uranium Stockpiles, Hormuz Supply Limited
Oil prices surged on Thursday (May 21) after a Reuters report said Iran's Supreme Leader, Ayatollah Mojtaba Khamenei, had ordered that near-weapons-grade uranium remain within the country. Brent rose 3.3% to $108.53 per barrel, while WTI rose 3.7% to $101.93 per barrel, after falling more than 5% the day before.
This move by Iran underscores a strong stance on one of the US's key demands and adds uncertainty to peace negotiations stemming from the US-Israel war on Iran. Islamabad is stepping up diplomatic efforts to expedite talks, while Iran is reviewing the latest US response. President Donald Trump has said he is willing to wait a few days for a "proper" answer from Tehran, but maintains the option of a counter-attack.
The Strait of Hormuz, a vital shipping lane that carries about 20% of global energy consumption, remains largely closed. Iran has established a "Persian Gulf Strait Authority" to control the waterway. Although a ceasefire since April has halted most fighting, the US coastal blockade and Iranian restrictions on traffic are squeezing supplies.
The decline in global oil inventories is deepening. The US Energy Information Administration (EIA) reported a drawdown of nearly 10 million barrels from the Strategic Petroleum Reserve in a week, a record high, while crude oil stocks also fell more than expected. IEA head Fatih Birol warned that peak summer demand and a lack of new exports from the Middle East could push the market into the "red zone" in July and August. ADNOC CEO Sultan Al Jaber added that full oil flows through Hormuz could only return in the first or second quarter of 2027, even if the conflict ends now.
Variables to monitor: Iran's response to the US proposal, oil flows through the Strait of Hormuz, global stock levels, and developments in US-Iran diplomacy. (arl)
Source: newsmaker.id
