Oil Rebounds, Trump Dampens Iran Deal Expectations
Oil prices rose on Thursday (May 28) after the US and Iran exchanged airstrikes, dampening market hopes for a peace deal that could reopen the Strait of Hormuz. Brent rose 2.3% to US$96.42 per barrel at 5:51 a.m. ET, while WTI gained 2.2% to US$90.52.
The IRGC said it had attacked a US airbase in Kuwait in retaliation for a US attack on the Iranian port city of Bandar Abbas earlier that day. Kuwait also said it was defending itself against missile and drone attacks, but did not identify the source of the attacks. This series marks a return to open hostilities, despite Washington's repeated assertions that a ceasefire remains in effect and describing the attacks earlier this week as defensive.
The rally in oil followed a weak Wednesday session and amid market expectations that a US-Iran deal was imminent. However, US President Donald Trump dismissed reports that Iran would reopen commercial shipping in Hormuz within a month, saying he was not yet satisfied with the draft agreement to end the three-month conflict.
Although some US officials had signaled optimism in the past week, the two sides are said to remain at odds over Iran's nuclear activities and the management of the Strait of Hormuz. In recent days, some ships have begun passing through, but flows remain far below pre-war levels. The effective closure of Hormuz continues to disrupt about a fifth of global oil supply, maintaining a supply risk premium in the market.
Trump also rejected the idea of Iran and Oman jointly controlling the strait, asserting that no single country can control the passage. For the oil market, this means a refocus on the "execution" of opening Hormuz, rather than just the headlines of negotiations—and as long as its operational status remains unrealized, price volatility and sensitivity to geopolitical developments are likely to persist. (Arl)*
Source: Newsmaker.id
