Diplomacy Stalls, Oil Remains Strong
Oil prices held steady after posting two days of gains, as US President Donald Trump extended a ceasefire with Iran but maintained a blockade of the Strait of Hormuz. Markets viewed the extension as reducing the risk of new attacks in the near term, but the disruption to energy flows remained unabated as the shipping lane remained locked.
In the Asian session on Wednesday (April 22), Brent traded below $98 per barrel after rising nearly 9% in the last two sessions, while WTI hovered around $89. Trump stated that the US would refrain from new attacks on Iran but would maintain the blockade of shipping linked to the Islamic Republic until "discussions are concluded, whatever the outcome."
Gulf oil remains highly sensitive to developments in Persia, particularly as shipping through Hormuz is virtually non-stop, while the passage typically handles about a fifth of global oil flows. Volatility also surged to its highest level since 2020, confirming the market is moving with rapidly changing headlines.
Rebecca Babin of CIBC Private Wealth Group noted that information is moving very quickly, but the reality is that supply hasn't changed as oil flows remain constrained. On the Iranian side, the semi-official Tasnim news agency reported that Tehran will not reopen the strait as long as the US Navy continues to intercept ships, and will break the blockade by force if necessary. The US also reportedly stopped and boarded a sanctioned oil tanker on Tuesday, after seizing its cargo over the weekend and turning back other vessels.
Prices briefly surged above $100 per barrel in after-hours trading when reports emerged that Vice President JD Vance had canceled a trip to Islamabad, followed by Iranian media reports that Tehran had said it would not attend talks via Pakistan. Prices then fell back after Trump's comments about extending the ceasefire, while the market continues to view negotiations as a last-minute opportunity for de-escalation to clarify when tankers can resume passage.
On the policy front, the US Treasury Department stated that "maximum pressure" will continue to limit Iran's ability to generate and move funds, while analysts believe the condition of Hormuz remains key to the oil market and the global economy. In the latest trading, June Brent fell 0.5% to $97.99 per barrel and June WTI fell 0.7% to $89.06, indicating that prices remain high, but intraday movements are heavily influenced by negotiation signals, blockade strengthening, and the status of shipping flows.
5 key points (detailed & simple):
- Trump extended the ceasefire with Iran, but insisted the Hormuz blockade would remain in place until talks are completed.
- Oil held steady after a two-day rally; Brent fell below $98 and WTI around $89, after a nearly 9% gain in two sessions.
- Hormuz shipping remains nearly halted; this passage typically carries about 20% of global oil flows, leading to sharply higher volatility.
- Iran refuses to open the strait while the US intercepts ships; the US has resumed fraud/boarding of ships related to sanctions.
- Key points changed rapidly, driving prices (at one point above $100), but the market assesses that without a peace deal, the oil and inflation environment remains high. (Asd)*
Source: Newsmaker.id
