Brent Prices Fall Slightly, Hormuz Risks Loom
Oil prices corrected slightly in quiet Asian trading, as market participants awaited the outcome of the US-Iran talks in Geneva, scheduled for Tuesday. Market focus returned to geopolitical risks after rallying in the previous session.
Brent for April delivery fell about 0.5% to $68.33/barrel at 12:38 a.m. Singapore time, after gaining 1.3% on Monday. Meanwhile, WTI for March delivery was around $63.50/barrel, up about 1% from Friday's close due to no settlement on Monday (Presidents' Day holiday in the US).
Trading volumes remained below average. Holidays in the US and Canada on Monday, along with the Lunar New Year holiday in many Asian countries, thinned liquidity, making price movements more volatile, although headlines remained unchanged.
On the risk side, attention is focused on naval exercises by Iran's Revolutionary Guard Corps (IRGC) in the Strait of Hormuz, a vital corridor through which about a fifth of global oil flows. These exercises heighten market sensitivity ahead of the talks, as any escalation along the path has the potential to trigger a spike in the risk premium.
Ahead of the negotiations, Iranian Foreign Minister Abbas Araghchi met with the head of the UN nuclear watchdog (IAEA) in Geneva and is said to be preparing a "proposal" to take to indirect talks with US envoy Steve Witkoff. From Washington, US Secretary of State Marco Rubio expressed hope that the two sides could find a path to agreement.
Geneva is also the setting for another geopolitical agenda: Russia-Ukraine negotiations are scheduled for Tuesday-Wednesday, although the market believes the chances of a quick peace deal and the large-scale return of Russian barrels are still limited in the near term.
ANZ assesses that the market remains "jittery" due to geopolitical uncertainty. If Middle East tensions ease or there is significant progress in Ukraine, the risk premium currently attached to oil prices could quickly "unravel," leaving oil vulnerable to a downward turn, despite initial support from supply concerns. (Asd)
Source: Newsmaker.id
