Oil Falls, Market Tests Iran Deal Without Hormuz Certainty
Oil weakened as the market reassessed the chances of a US-Iran peace deal, despite renewed hostilities surrounding the Strait of Hormuz. Brent fell to near US$98 per barrel after rallying nearly 4% on Tuesday, while WTI hovered around US$92. US Secretary of State Marco Rubio emphasized that finalizing a peace pact would likely take several days, keeping expectations moderate.
The primary risk remains the physical condition of Hormuz. The strait, which normally carries about a fifth of the world's oil and LNG supplies, remains practically closed due to the US and Iranian blockade. However, at least two non-Iranian supertankers reportedly successfully exited on Tuesday, the first time in a week that around 4 million barrels of non-sanctioned oil had passed through. Some believe Iran holds a strategic advantage due to its control of the waterway, while the latest military incident underscores that the de-escalation path is not yet completely secure.
The market is currently trading on the "prospect" of a deal, not a clear opening. Westpac believes Brent's decline could continue if optimism increases, but as long as Hormuz hasn't fully reopened and stabilized, the price decline is likely to be shallow and temporary. In Washington, President Donald Trump is scheduled to hold a cabinet meeting on Wednesday, as talks remain on key points of contention, such as the $24 billion in frozen Iranian assets and Tehran's refusal to guarantee unrestricted free passage through Hormuz.
Source: Newsmaker.id
