Oil Rises Slightly, Market Reassesses US-Iran Risk
Oil prices are starting to rise again after the previous session's heavy losses. In Tuesday's trading, WTI recovered to the $62-$63/barrel range, while Brent is back nearing $66-$67/barrel, after a day of expected gains of more than 4% when the market suddenly eliminated its risk premium.
Sentiment is being pulled in two directions at once. On the one hand, tensions in the Strait of Hormuz have again put the market on alert: the UK Maritime Trade Operations reported an incident where a ship was briefly "intercepted" by a small armed boat at the entrance to the strait—a reminder that the risk of shipping disruptions has not disappeared.
On the other hand, the market may also be receiving "cooling" signals. Donald Trump said nuclear talks with Iran could begin within days, and plans for a follow-up meeting in Turkey have helped to mitigate fears of escalation—the result: the geopolitical risk premium that had supported prices yesterday is slowly eroding.
The focus now shifts to trade. Trump claims he will cut tariffs on India as a counterbalance to Narendra Modi's commitment to halt purchases of Russian oil—although the details remain unclear. If this scenario materializes, global supply flows could shift rapidly: Russian oil, which India typically absorbs, will seek a new home, adding pressure to a market already plagued by oversupply concerns.
In conclusion, oil is entering a "tug-of-war" mode. The risks of the Hormuz Strait keep the market from relaxing, but hopes for US-Iran diplomacy and the supply/oversupply narrative make it easier to slow down. As long as headlines continue to pull against each other, the movement is likely to remain whiplash—a slight uptick, then a reversal if new news emerges. (alg)
Source: Newsmaker.id
