Ceasefire Eases Oil Pressure
Oil prices held steady on Friday (June 19), as the market weighed Iran's claim to authority in the Strait of Hormuz and reports of a ceasefire between Israel and Hezbollah. Brent for August delivery fell 0.4% to $79.55 per barrel at 2:35 p.m. London time, while WTI July was virtually unchanged at $76.59 per barrel. The more active WTI August contract edged lower to $75.80 per barrel.
Brent remained on track for a weekly decline of around 9%, after oil prices gave up nearly all of the gains made since the US-Iran war began on February 28. This correction reflects a reduction in the war risk premium, although the market remains uncertain about the imminent return of energy flows through the Persian Gulf.
Sentiment was supported by reports that Israel and Hezbollah had agreed to a ceasefire starting Friday. If the deal holds, it could remove one of the main obstacles to implementing the interim US-Iran agreement, as a cessation of hostilities in Lebanon was part of Tehran's conditions.
However, uncertainty remains high after Iran stated that ships passing through the Strait of Hormuz must have mandatory insurance policies. For now, these policies are free, but the Iranian document leaves open the possibility of future charges. This move adds to market concerns about the potential for new tolls or fees on one of the world's most important energy routes.
The resumption of shipping traffic has also been uneven. Several vessels carrying stranded oil began moving through Hormuz after the Washington-Tehran interim agreement was signed on Wednesday. However, no tankers were seen leaving the Persian Gulf on Friday morning, indicating the fragile nature of the normalization process.
Energy producers are beginning to adjust to the changing situation. Abu Dhabi National Oil Co. reportedly asked customers to resume loading oil from ports in the Persian Gulf, while Kuwait has begun increasing production and is targeting output above 2 million barrels per day within a week.
Meanwhile, nearly 80 million barrels of oil are sitting on supertankers in the Persian Gulf and ready to pass through Hormuz if traders and shipowners approve. If tanker traffic resumes too quickly, additional supply could enter the market at a time when some Asian refineries have already secured short-term needs.
For the oil market, the key issue has now shifted from the reopening of Hormuz to the speed and quality of the normalization process. The full process could be lengthy, requiring coordination of vessels, reopening wells, infrastructure repairs, and safety measures in shipping lanes.
The next focus will be on the sustainability of the Israel-Hezbollah ceasefire, Iran's permitting arrangements in Hormuz, the response of shipowners, and the schedule for further US-Iran negotiations. As long as tanker traffic remains inconsistent, oil prices could remain sensitive to diplomatic and security changes in the region. (arl)
Source: Newsmaker.id
