Oil Weakens, Cushing Stockpiles Dwindle Alarm
Oil prices weakened after a three-day rally, following Israel and Lebanon's agreement for a conditional ceasefire if Hezbollah also ceases hostilities. Brent traded around US$97/barrel and WTI near US$96/barrel, after rising nearly 10% in the first three sessions of the week. A joint statement from Israel, Lebanon, and the US stated that the agreement requires a "complete cessation of fire" from Iran-backed Hezbollah.
While the ceasefire may mitigate short-term risks, the main drivers of price action remain US-Iran negotiations and the status of the Strait of Hormuz. Washington and Tehran reportedly outlined a framework for extending the two-month ceasefire and reopening Hormuz, but detailed discussions have stalled and sporadic clashes have resumed. The semi-official Tasnim news agency quoted Iran's foreign minister as saying there has been no concrete progress and warning that Iran could target sites in Israel if attacks on Beirut continue.
The delay in the settlement has led the market to reassess supply risks and tightening inventories. US data showed crude oil inventories at Cushing, Oklahoma—the WTI delivery point—fell for the sixth straight week and are nearing operational minimums, reducing the cushion if the Gulf Stream fails to recover. Some analysts believe this could keep prices biased upward if talks stall again.
Trump said the Strait of Hormuz would open “soon” if Iran signs a memorandum to cease hostilities, adding that some areas would need to be cleared of mines and downplaying the threat of mines to commercial shipping. But as long as the waterway remains unresolved, the market remains sensitive to any shift in narrative and evidence of shipping, given that about a fifth of global oil supplies typically passed through the chokepoint before the war.
In Washington, the Republican-led House of Representatives voted to end the US war with Iran, adding to signs of domestic political pressure ahead of the midterm elections. However, the move would not necessarily change military operations, as it still requires Senate approval and legal debate.
In Asian trading at 12:30 p.m. in Singapore, August Brent fell 0.9% to US$96.97/barrel, while July WTI fell 0.9% to US$95.20/barrel. (asd)
Source: Newsmaker.id
