Gulf Supply Recovers Gradually, Oil Steady
Oil prices held steady on Friday (June 19th) as the market assessed that the recovery in shipping flows through the Strait of Hormuz was not yet fully consistent. Brent traded above $79 per barrel in the London session and remained on track for a weekly decline of around 9%, after the rally triggered by the US-Iran war was nearly erased.
Market sentiment improved after Washington and Tehran signed an interim agreement on Wednesday. Several previously stuck vessels began to leave the channel, including a Saudi-owned tanker for the first time since the conflict began more than three months ago.
However, that optimism was tempered after direct US-Iran talks for a permanent peace deal were postponed. US Vice President JD Vance canceled a planned trip to Switzerland, while Israeli forces declared they would continue their attacks on Hezbollah in Lebanon. A cessation of hostilities in the region is one of Iran's key conditions under the interim agreement.
On Thursday, ships carrying nearly 10 million barrels of oil were seen outside the strait or moving through it. Vance said 12.5 million barrels of oil had passed through the Strait of Hormuz the previous night, potentially the highest daily volume since the war began in late February. Under normal conditions, Hormuz typically carries around 20 million barrels per day of oil and refined products.
However, no tankers were seen leaving the Persian Gulf on Friday morning. This indicates that the normalization process remains fragile and unstable. The market is also considering technical risks, ranging from vessel deployment, well reopening, infrastructure repairs, and the possibility of mine clearance in shipping lanes.
Some producers are beginning to adjust to the new situation. Abu Dhabi National Oil Co. has reportedly asked customers to resume loading oil from ports in the Persian Gulf. Kuwait has also begun increasing production and is targeting output above 2 million barrels per day within a week.
On the supply side, nearly 80 million barrels of oil are said to be on supertankers in the Persian Gulf and ready to pass through Hormuz if traders and shipowners approve. However, a rapid reopening of the flow could create a surge of new supply that Asian refineries may not immediately need, as some buyers have already secured short-term needs.
Brent for August delivery fell 0.9% to $79.16 per barrel at 10:55 a.m. London time. WTI July rose 0.7% to $77.16 per barrel, while the more active WTI August contract edged lower to $75.45 per barrel.
The market's next focus will be on the continuation of US-Iran talks, the security of the Strait of Hormuz, the response of shipowners, and the pace of recovery of Persian Gulf exports. As long as ship flows remain unstable, oil prices could remain sensitive to any diplomatic and security developments in the region. (arl)
Source: Newsmaker.id
