Oil Rises Slightly, US-Iran Deal Not Yet in Sight and Supply Remains Tight
Oil prices gained modestly on Monday (May 4), supported by the absence of a peace agreement between the United States and Iran, which has kept supply constraints at bay and prices hovering above the psychological level of US$100 per barrel. Brent rose 0.6% to US$108.84 per barrel, while WTI rose 0.6% to US$102.59 per barrel, after both had corrected at Friday's close.
Philip Nova analyst Priyanka Sachdeva believes the market remains underpinned by tight supply conditions due to distribution disruptions and geopolitical uncertainty. She believes that without a clear and sustainable resolution that restores normal flow through the Strait of Hormuz, oil prices are likely to remain high, with risks still tilted to the upside.
Meanwhile, US President Donald Trump said Washington would begin efforts to assist ships stuck in the Strait of Hormuz. However, market participants still see shipping lanes in the strategic waters as limited, with a peace agreement still pending, so the supply risk premium has not completely disappeared from prices.
US-Iran negotiations continued over the weekend, with both sides assessing each other's responses. Trump has made a nuclear deal with Tehran a priority, but Iran reportedly wants to postpone nuclear talks until after the war and is demanding the lifting of a blockade that hampers shipping in the Gulf as a first step.
On the supply side, OPEC+ announced on Sunday that it would raise its oil production target for seven member states by 188,000 barrels per day in June, marking the third consecutive monthly increase. However, the market still believes the short-term determining factors remain the normalization of the Hormuz flow and the certainty of US-Iran diplomatic progress.
Source: Newsmaker.id
