Oil Falls Amid Geopolitical Tensions and Peace Hopes
Oil prices fell sharply in a volatile session, with traders awaiting whether US President Donald Trump would soon declare an end to the war in Iran. Brent crude briefly fell below $100 per barrel, even dropping more than 5%, before recovering most of the losses, and eventually trading around $103.
Trump, via Truth Social, revealed that Tehran had requested a ceasefire, which the US would consider once the Strait of Hormuz was reopened. Trump had previously stated that the US might withdraw from Iran within two to three weeks, and that while a deal with Tehran was possible, it was not necessary to end the conflict.
Currently, oil prices remain about 40% higher than pre-war levels, as tensions continue to pressure oil flows in the Strait of Hormuz, which supplies about a fifth of the world's oil supply. According to the International Energy Agency (IEA), this supply disruption is the largest in history, with prices of some fuels briefly soaring to over $200 per barrel.
Amid heightened market volatility, intraday trading has become highly volatile, with many traders reducing their positions. Although Trump has suggested a possible US withdrawal, it remains unclear how quickly traffic through Hormuz could recover and whether a return to normal operations is possible. Trump has also indicated that US allies must play a role in securing the strait, while increasing energy production in the region is expected to take time, although a ceasefire could reduce the risk of further infrastructure damage. Trump is scheduled to deliver a speech on Wednesday evening, focusing on recent developments regarding Iran and the possibility of further escalation, which has also been highlighted by the departure of a third US aircraft carrier strike group for the Middle East.
Meanwhile, surging energy prices have raised concerns about an inflation crisis, with retail gasoline prices in the US surpassing $4 per gallon for the first time since August 2022, which is expected to further pressure Trump. Iran's demands to maintain sovereignty over the Strait of Hormuz have also further complicated a resolution to the conflict, despite the United Arab Emirates' push to form an international coalition to open the waterway. Meanwhile, attacks are still ongoing, with an oil tanker being hit near Qatar, but no environmental damage has been reported. (gn)
Source: Newsmaker.id
