Oil Holds High, Ceasefire Extended, but Hormuz Blockade Remains
Oil prices held high after a two-day rally, as U.S. President Donald Trump extended a ceasefire with Iran despite stalled diplomacy and a blockade of the Strait of Hormuz still holding back supply flows. The market viewed the extension as easing the risk of new attacks in the near term, but the physical barriers to oil shipments remained unchanged.
Brent traded around $98 per barrel after rising nearly 9% in the previous two sessions, while WTI hovered around $89. Trump said the U.S. would refrain from new attacks on Iran, but would continue blocking shipping linked to the Islamic Republic until “discussions are complete, whatever the outcome.”
Trump also reinforced his message in a post on Truth Social, stating the U.S. would not lift the blockade to open Hormuz without a deal. The statement maintained the market perception that economic and military pressure remain the U.S.’s primary tools, despite the extension of the ceasefire.
Oil remained volatile due to developments in the Persian Gulf and the near-halt in shipping through Hormuz, a passage that typically carries about a fifth of global oil flows. Volatility is said to have surged to its highest level since 2020, confirming that prices are moving quickly following headline changes, while supply conditions on the ground have not yet recovered.
Rebecca Babin of CIBC Private Wealth Group believes that headlines are moving very quickly, but barrels remain stuck as flows remain limited. Tasnim reported that Iran will not open the strait as long as the US Navy continues to intercept ships, and will break the blockade by force if necessary. The US said on Tuesday it was stopping and boarding sanctioned tankers, after seizing a cargo ship over the weekend, turning back 28 vessels in total.
Prices also briefly surged above $100 per barrel in post-close trading on reports of Vice President JD Vance's canceled trip to Islamabad and Iran's refusal to attend talks, before falling following Trump's comments about extending the ceasefire. The market continues to view the status of Hormuz as a key determinant, amid a series of unresolved issues, including Iran's nuclear program, the Israel-Lebanon conflict, and the US "maximum pressure" policy, which is claimed to limit Iran's ability to export oil. In the latest trading, June Brent fell 0.3% to $98.17 per barrel (12.01 Singapore time) and June WTI fell 0.5% to $89.23.
5 key points (detailed & simple):
- Oil held high after a two-day rally, despite the extension of the US-Iran ceasefire and stalled peace talks.
- Brent was around $98 and WTI around $89; Brent rose nearly 9% in two sessions before a slight correction.
- Trump held off on new attacks, but insisted the Hormuz blockade would remain until talks were completed.
- Hormuz flows remain nearly halted; Iran refuses to open the strait while US interceptions continue, with the US claiming to have turned back 28 ships and boarded a sanctioned tanker.
- Prices are highly sensitive to headlines (at one point above $100) as the market assesses that without the opening of Hormuz, the high oil environment and inflation risks will persist. (Asd)*
Source: Newsmaker.id
