Geopolitical Risks Weaken, Oil Prices Fall Sharply in a Week
Oil prices fell more than 1% on Friday and headed for their deepest weekly decline since early April, amid reports that the US and Iran may extend a ceasefire. Brent for July fell 1.1% to $92.67 per barrel, while WTI fell 1.4% to $87.64 at 03:30 GMT.
On a weekly basis, Brent fell 10.5% and WTI fell 9.2%, their biggest declines since the weeks ending April 6 and April 13, respectively. Pressure arose as the market assessed that the risk of supply disruptions would ease if a deal were to go ahead, reducing the geopolitical premium on oil prices.
Sources quoted by Reuters said the US and Iran reached an agreement on Thursday to extend the ceasefire and ease restrictions on shipping through the Strait of Hormuz, although it has not yet been approved by President Donald Trump and Iranian state media said it was not final. Meanwhile, prices remain sensitive to shifting signals regarding the chances of an end to the three-month conflict and the reopening of Hormuz.
Volatility has remained high in recent sessions, with intraday movements reaching around $6 for both benchmarks amid conflicting messages. The Strait of Hormuz is in focus as it is a vital passageway for about a fifth of global oil and LNG supplies, while traffic through the chokepoint remains well below pre-war levels.
ING believes the reopening of Hormuz could provide immediate relief, but a full recovery in supply and operations in the region is not guaranteed. Upstream production is said to have fallen because some producers shut down to manage storage constraints, while refineries need time to ramp up output, including because some infrastructure was affected by the attacks. (asd)
Source: Newsmaker.id
