Oil Swings, Peace Signals Clash with Trump Threats
Oil prices rebounded lower on Monday (April 6th) after earlier gains, as the market weighed reports of talks for a 45-day ceasefire in the Iran war against US President Donald Trump's new ultimatum for Tehran to reopen the Strait of Hormuz. Brent briefly rose to near US$112 per barrel before retreating, while WTI held steady around US$109.
Axios reported that the US, Iran, and regional mediators were discussing terms for a 45-day pause that could potentially lead to a permanent end to the war, although the chances of a partial agreement within 48 hours were considered low. Meanwhile, Trump threatened attacks on Iranian power plants and infrastructure if Hormuz was not reopened, while Tehran rejected the demands, and the passage remained closed except to a small number of ships.
With about a fifth of global energy shipments typically passing through Hormuz, the market is shifting from a geopolitical risk premium to concerns about physical supply tightness. Analysts at A/S Global Risk Management believe the focus is increasingly on the “physical premium” as the disruptions persist for longer.
Iran is said to have exempted Iraq from restrictions in the strait, and SOMO said traders can load Iraqi oil because its carriers can now pass through the waterway, testing buyers' confidence in security guarantees. Meanwhile, Saudi Arabia raised its Arab Light price for Asia: Saudi Aramco reportedly raised the premium to US$19.50 over the regional benchmark for May sales.
Signs of near-term supply concerns are evident in the surge in Brent futures prices and the widening of the gap between the nearest Brent and WTI contracts to more than US$10 per barrel in recent days, indicating extreme shortages. At 10:04 a.m. London time, June Brent was down 1% at US$107.41 per barrel, while May WTI was at US$109.34.
The next direction will be determined by developments in the ceasefire talks, Trump's deadline on Hormuz, and concrete evidence of changes in ship flows and physical supply in the region.
Source: Newsmaker.id
