Blockade Continues, But Diplomacy Hopes Pressure Oil
Oil prices weakened on Tuesday (April 14) after signals from Washington and Tehran suggested the possibility of reviving negotiations, despite the US recently initiating a blockade of ships heading to and from Iranian ports. Brent fell slightly to around US$99 per barrel, while WTI hovered near US$97, with the market pricing in the possibility of a de-escalation that could lower the supply risk premium even as operational uncertainty in the Strait of Hormuz remains high.
Sources familiar with the discussions said the US and Iran were discussing the next round of face-to-face negotiations to seek a long-term ceasefire, with the goal of holding before the two-week pause in hostilities announced on April 7 ends. Reuters also reported that the negotiating team could return to Pakistan this week. Meanwhile, market participants were monitoring the US-sanctioned China-linked vessel, the Rich Starry, which tracking data showed was transiting the strait and could be an early test of the new restrictions, although it was unclear whether the ship was calling at an Iranian port or carrying cargo.
Pressures in the energy market remain complex. The International Energy Agency warned that the conflict risks wiping out oil demand growth this year—the first annual decline since the pandemic—and its head said prices do not yet fully reflect the scale of the crisis. On the supply side, the war has hit energy infrastructure, and Iran has maintained restrictions on flows through Hormuz, triggering a supply shock, while the US blockade adds a new layer of risk to supply chains and shipping movements.
Diplomatic pressure is also coming from the region. The Wall Street Journal reported that Saudi Arabia is urging the US to end the blockade and return to the negotiating table, amid concerns that Washington's move could encourage Iran to disrupt other vital shipping routes. Downstream, retail gasoline and diesel prices in the US briefly rose to their highest levels since 2022 earlier this month, while jet fuel and diesel prices in Europe surged to or near record levels above US$200 per barrel. JD Vance, a vice president at JD Vance, acknowledged the pressure on US consumers but said the blockade increases negotiating leverage.
The market now awaits confirmation of the schedule and location of the next round of talks, clarity on the rules for enforcing the blockade, and evidence of the restoration of shipping flows through Hormuz. Key variables monitored include the intensity of physical supply disruptions, the risk of disruptions expanding to other chokepoints, the direction of refined product prices (diesel/jet), and IEA and government signals regarding the impact on energy demand and inflation. (Arl)*
Source: Newsmaker.id
