Oil Stuck, Signs of Iran Diplomacy Emerge
Oil prices pared gains after briefly surging in European trading on Monday (July 20th), after Iran announced it had accepted proposals from several mediators regarding the war with the US. This news signaled that the path to diplomacy remains open amid the escalating conflict.
Brent traded around US$88 per barrel after previously reaching US$91 per barrel. This sharp movement indicates the oil market remains highly sensitive to news of escalation or the possibility of a de-escalation of the US-Iran conflict.
The Iranian Foreign Ministry stated that several ideas from mediators had been conveyed to Tehran. Although no further details were provided, the statement was enough to reduce some of the war risk premium that had previously driven oil prices up.
Previously, oil prices surged after the US and Iran escalated attacks, including on ships attempting to transit the Strait of Hormuz. This waterway is a major concern as approximately one-fifth of global oil flows pass through it.
Iran also stated it had stopped four ships attempting to use the unsafe route through Hormuz. Two ships reportedly encountered incidents and were stopped, while the other two turned back after receiving warnings.
As a result, oil prices remain volatile as long as the status of the Strait of Hormuz remains unclear. If diplomacy develops positively, Brent could decline further. However, if attacks on ships and energy facilities continue, supply risks remain significant, and oil prices could rebound. (arl)
Source: Newsmaker.id
