Oil Prices Slightly Correct after Signals of Second Round of US-Iran Talks
Oil prices fell slightly after officials in Pakistan said a second round of US-Iran talks was expected, albeit without a clear timetable. This signal of negotiations reduced some of the risk premium that had built up in recent days.
Brent crude fell 1.44% to around US$98 per barrel before stabilizing. Despite the intraday weakness, prices still rose nearly 17% for the week, the biggest weekly surge since the initial war-fueled spike in early March, as tensions in the Strait of Hormuz escalated.
Sources familiar with the discussions said Iranian Foreign Minister Abbas Araghchi was expected to arrive in Islamabad on Friday evening, while a US logistics and security team was already in Pakistan to support the negotiations. The market considered the prospect of a meeting, while uncertain, sufficient to cool short-term sentiment.
However, supply risks remain prominent, as the Strait of Hormuz is reportedly slowing to a near-stop amid the US-Iran escalation, while Washington and Tehran remain deadlocked on other issues. The US naval blockade of Iranian ports is said to be suppressing Iranian oil exports and is a major point of contention, keeping volatility high.
Market implications: Oil movements are now highly headline-driven, with risk premiums decreasing when there are signs of de-escalation, but quickly returning when there are indications of shipping disruptions or a tightening of the blockade. Variables to monitor include the certainty of the schedule/format of the talks, developments in shipping operations in Hormuz, and changes in military posture and blockade policies that determine supply normalization. (gn)*
Source: Newsmaker.id
