Oil Prices Correct, US-Iran Conflict Still Concerns Market
Oil prices weakened in trading on Thursday (July 9th) after previously strengthening. The market began to reconsider the escalation of the conflict between the United States and Iran and its impact on peace efforts and the full opening of the Strait of Hormuz.
Brent crude fell 11 cents, or 0.1%, to US$77.91 per barrel at 13:22 GMT. Meanwhile, West Texas Intermediate (WTI) crude fell 38 cents, or 0.5%, to US$73.14 per barrel.
Despite the correction, pressure on the energy market has not completely subsided. Brent and WTI previously touched their highest levels since June 22nd on Wednesday, after the conflict in the Gulf region escalated.
New York Fed President John Williams said the market expects oil prices to decline in the next six to 12 months. He considered these expectations reasonable, although short-term geopolitical risks continue to overshadow price movements.
Both oil benchmarks briefly rose more than US$1 in trading after Wednesday's close. This increase occurred after the United States launched an attack on Iran, which was then retaliated with attacks on Kuwait and Bahrain.
Saxo Bank analyst Ole Hansen assessed that the oil market is currently in a very nervous state. According to him, any news that weakens the prospects for a peace deal has the potential to increase the risk premium on oil prices.
Tensions escalated after Iranian forces targeted US military infrastructure in the Gulf states on Thursday. The attack came after US attacks on Iran's southern coastal areas and eastern provinces, further jeopardizing the ceasefire agreement that had only been in place for about three weeks.
Iranian state media also reported that Tehran fired 10 ballistic missiles at the Azraq military base in Jordan. These developments have raised market concerns about the potential for a wider conflict in the Middle East.
Meanwhile, several war risk insurers have begun advising shipping companies to suspend voyages through the Strait of Hormuz. Some are also reviewing insurance policy terms after attacks on ships renewed the threat of open war.
For the market, the current oil price correction does not necessarily signal the end of the pressure. As long as the US-Iran conflict persists and the Strait of Hormuz remains at risk of disruption, oil prices remain volatile, with the potential for sudden spikes if the situation worsens.
Source: Newsmaker.id
