Oil Price Drop Not Permanent, US-Iran Peace Fragile
Oil prices rose in early Asian trading on Monday (June 29th), after renewed tensions between the United States and Iran raised further doubts about the peace deal between the two countries. However, price gains were restrained as both sides reportedly remained committed to continuing talks in Qatar this week.
The Brent contract for August delivery rose 0.8% to US$72.56 per barrel. Oil prices attempted to recover from a four-month low after being pressured by a easing of geopolitical risk premiums. Investors briefly eased concerns about conflict after the US and Iran signed an interim peace deal.
Pressure on oil prices also stemmed from improving supply conditions. Shipping flows through the Strait of Hormuz returned to near pre-conflict levels, leading the market to view the risk of energy distribution disruptions as easing. This route is a major concern as it is one of the most crucial chokepoints in the global oil trade.
However, new attacks over the weekend have further altered market sentiment. The US and Iran reportedly exchanged attacks over the weekend amid differing views on Iran's authority in the Strait of Hormuz. This retaliatory action temporarily slowed shipping flows and pushed oil prices higher in Monday's trading.
Oil price increases remained limited after reports emerged that the US and Iran had agreed to an immediate cessation of hostilities. The two countries were also said to be holding new talks in Qatar. This news prevented market panic, although investors remained cautious about the fragility of the interim peace deal.
Last week, oil prices plunged more than 10% and returned to pre-war levels after the US and Iran agreed to an interim agreement to end the conflict. However, tensions between Israel and Lebanon remain a major stumbling block. Iran is demanding that Lebanon be included in the broader peace deal, while clashes between Israel and the Hezbollah group continue in southern Lebanon. (asd)*
Source: Newsmaker.id
