Oil Rises After US Attack on Iran
Brent oil prices rose more than 2% in Asian trading on Tuesday (May 26th), following the United States military's attack on Iran. This action renewed market concerns, as the prospects for a peace agreement and the reopening of the Strait of Hormuz remain unclear.
Brent rose by around US$1.98, or 2.1%, to US$98.12 per barrel. This increase occurred after a sharp price drop of around 7% in the previous session, as the market hoped the conflict would soon subside. Meanwhile, WTI oil was at around US$91.79 per barrel, still under pressure compared to last weekend's close.
Market participants assessed that the US attack in southern Iran and the Israeli attack on Hezbollah had increased geopolitical risks. This condition pushed Brent prices up and widened the price gap with WTI. Uncertainty increased after US Secretary of State Marco Rubio said negotiations with Iran could take several days.
The Strait of Hormuz remains a major concern for the global energy market. Since the conflict began, Iran has reportedly restricted most non-Iranian shipping through the Strait of Hormuz. This is despite the Strait of Hormuz being a vital route for approximately one-fifth of the world's oil and liquefied natural gas flows.
Meanwhile, Washington and Tehran have reportedly made progress in discussing a memorandum of understanding to temporarily halt the war. The agreement reportedly gives both sides 60 days to reach a final agreement. One of the points discussed is the possibility of clearing mines in the Strait of Hormuz to allow ships from various countries to safely pass through.
Despite signs of progress, the market remains uncertain about the success of the agreement. US President Donald Trump has again demanded that Iran hand over its enriched uranium for destruction. This has kept market participants on edge, as the deal could collapse in the final stages and trigger another spike in oil prices. (asd)*
Source: Newsmaker.id
