Oil Rises as Market Doubts US-Iran Deal, Hormuz Remains Stalled
Oil prices rose on Thursday (April 16), reversing initial weakness, as markets questioned whether US-Iran peace talks would yield a deal to end the war that has disrupted Middle East energy supplies. Brent rose US$1.65, or 1.7%, to US$96.58/barrel at 08:32 GMT, while WTI rose US$1.45, or 1.6%, to US$92.74/barrel. Both benchmarks closed virtually unchanged on Wednesday after trading within a wide range.
The US-Israel conflict with Iran has halted traffic in the Strait of Hormuz, a waterway that normally carries about 20% of global oil and LNG flows. US and Iranian officials are said to be considering returning to Pakistan for further talks as early as this weekend, while Pakistan's army chief arrived in Tehran on Wednesday as a mediator. Sources familiar with the discussions said Iran could consider allowing ships to pass freely through the Omani side of Hormuz if an agreement is reached to prevent a resumption of conflict after the two-week ceasefire that began on April 8.
However, supply risks are still considered high. ING estimates that around 13 million barrels per day of oil flows have been disrupted by the Hormuz closure, even after accounting for pipeline diversions and the small number of ships still passing through. This disruption could potentially increase after the US announced a blockade of Iranian ports following the collapse of talks last weekend. US Treasury Secretary Scott Bessent also said Washington would not renew sanctions waivers for some Iranian and Russian oil.
On the data front, the EIA reported that US oil, gasoline, and distillate inventories fell last week, as countries sought replacement supplies to boost exports and curb imports. The market is now monitoring the continuation of US-Iran talks, the operational status of Hormuz (including the “Omani side” option), details of US blockade enforcement, and the impact of sanctions policy and subsequent inventory data on near-term supply balances. (Arl)*
Source: Newsmaker.id
