Oil Stabilizes After 5% Drop, Market Tests Hormuz Deal Certainty
Oil prices attempted to stabilize on Thursday after the previous session's sharp decline, as the market reassessed how quickly the US-Iran deal could truly restore shipping through the Strait of Hormuz. Brent was last at around US$96.41 per barrel, while Brent futures were around US$94.11.
Wednesday's major correction came after oil prices closed down around 5% as investors awaited an update on the US-Iran framework agreement to end the conflict and reopen Hormuz. Brent closed at US$94.29 and WTI at US$88.68.
The key issue is "execution," not just headlines. Reuters reported that Iranian state television mentioned a draft framework agreement that, among other things, targets the restoration of commercial shipping within a month, but Washington denied the claim. At the same time, Trump asserted that no single country would control Hormuz and called the negotiations unsatisfactory.
The fundamental transmission remains through the supply risk premium. Any sign of a recovery in Hormuz traffic has the potential to lower the premium, but as long as the route hasn't returned to operational normalcy, the market is likely to maintain price volatility and respond quickly to changes in diplomatic narratives and security dynamics on the ground.
The next variables to monitor are the details of the Hormuz traffic management mechanism, a market-verifiable reopening timeline, and the consistency of statements from both parties. Until such certainty emerges, oil price declines are likely to remain limited, and movements will remain headline-driven. (ayu)*
Source: Newsmaker.id
