Oil Rises, Hormuz Remains Shutdown
Oil prices continued their rise for a fourth day after the United States and Iran failed to hold a new round of peace talks and remained locked in a standoff over control of the Strait of Hormuz. This uncertainty kept the supply risk premium high, as shipping access to the strategic waterway has not yet been restored.
Brent traded around $97 per barrel after surging nearly 13% in the past three sessions, while WTI hovered around $96. US President Donald Trump said the ceasefire agreed on April 7 would remain in effect indefinitely pending Iran's submission of a new peace proposal, but Tehran has said it has no plans to enter negotiations anytime soon.
Price movements remain heavily driven by headlines. Brent rose as much as 4.2% early in the session before recovering quickly following unconfirmed reports of an explosion in Iran, underscoring the market's continued vulnerability to rumors and updates on the situation on the ground.
The war that began in late February has roiled energy markets, particularly as the closure of Hormuz triggered a sharp drop in oil flows from key producers in the Persian Gulf. The US maintained a naval blockade on shipping entering and leaving Iranian ports to increase pressure, a move Iranian Foreign Minister Abbas Araghchi called a violation of the ceasefire.
Market participants believe prices remain skewed upward as long as flows through Hormuz remain restricted. Dennis Kissler of BOK Financial Securities said that as long as the impasse persists, the path of least resistance for prices remains higher, and the longer oil is prevented from flowing through the strait, the more upward pressure will persist. Warren Patterson of ING said the slow progress in negotiations is fading hopes for a resolution, leading prices to increasingly reflect the reality of supply disruptions, although the market could become "immune" if updates stop at headlines.
On the ground, Iran has closed Hormuz to almost all international shipping and quickly fired on a commercial vessel on Wednesday. Since the US blockade was imposed earlier this month, the US has reportedly seized and boarded ships and turned back dozens of others. In external geopolitics, attention is also focused on Environmental Impact Assessment (EIA) data showing declining inventories across all major refined product categories, while global demand for US supplies is driving oil and fuel exports to new records. In the latest trading, June Brent rose 2.0% to $103.90 (11:09 Singapore time) and June WTI rose 2.2% to $94.98.
5 key points (detailed & simple):
- Oil rose for a fourth day as US-Iran talks stalled and the struggle for control of Hormuz continued.
- Brent was around $97 and WTI around $96; the last three sessions' gains were close to 13% for Brent.
- Trump extended the ceasefire indefinitely pending Iran's proposal, but Iran has no intention of entering negotiations immediately.
- Hormuz remains tightly closed; Iran is restricting traffic and there are reports of gunfire on commercial vessels, while the US maintains the blockade and turns back numerous vessels.
- EIA data showed a decline in refined product stocks and record US exports, underscoring the market's growing reliance on US supplies amid Middle East disruptions. (Asd)
Source: Newsmaker.id
