Oil Plunges After Trump Cancels Strikes
World oil prices fell sharply on Friday (June 12th) after United States President Donald Trump canceled plans for new strikes against Iran. This decision eased market concerns about an escalating conflict in the Middle East, sending oil prices to their lowest level in nearly two months.
Brent futures fell 4.22% to US$86.57 per barrel, while West Texas Intermediate (WTI) fell 4.33% to US$83.91 per barrel. Both oil benchmarks hit their lowest levels since April 17th, as hopes grew that US-Iran tensions could ease soon.
Trump stated that talks with Iran were showing progress and that a peace agreement that could reopen shipping lanes in the Strait of Hormuz could be signed as early as this weekend. Iran, however, said it had not yet made a final decision, although most of the terms of the agreement were said to have been finalized.
Market sentiment was also influenced by reports that final negotiations between Iran and the US would focus on nuclear and economic issues, but would not address Iran's missile program. For the oil market, this signal is quite important because reopening the Strait of Hormuz could reduce the risk of disruptions to global energy supplies that previously drove oil prices sharply higher.
Although oil prices have fallen, the risk has not completely disappeared. The Strait of Hormuz remains a vulnerable point because it typically carries about a fifth of global oil and liquefied natural gas shipments. Iran previously announced the closure of the Strait of Hormuz and threatened to fire on ships attempting to pass through, although the US military stated that commercial vessels were still passing through the passage.
In my opinion, the current decline in oil prices is driven more by a shift in sentiment due to the prospect of a US-Iran peace deal, rather than by a complete end to the supply risk. If oil flows through the Strait of Hormuz do not recover quickly, the market could potentially face supply pressures again, especially during periods of increased seasonal demand.
In this scenario, oil prices could still rise sharply if global stocks run low and energy trade routes remain unregulated.
Source: Newsmaker.id
