Oil Seeks New Direction!
Oil prices are stabilizing after falling nearly 8% in the previous session. Brent is hovering above US$100 per barrel, while West Texas Intermediate (WTI) is hovering near US$96 per barrel, as the market weighs a new US proposal to Iran to end the war in the Middle East.
Washington has reportedly proposed a one-page memorandum of understanding that could pave the way for a gradual reopening of the Strait of Hormuz. Iran is expected to respond in the coming days, but no final agreement has been reached.
The Strait of Hormuz remains a focus of global energy markets, as the vital waterway has been largely closed since late February. Currently, the region faces a dual blockade: Iran is hindering shipping traffic, while the US Navy is preventing ships from entering and leaving Iranian ports, putting pressure on the country's oil industry.
Despite hopes for diplomacy, market participants remain cautious. Some analysts believe the previous sharp drop in oil prices was too rapid and overly optimistic, as the key factor that truly determines price direction is when and how the Strait of Hormuz can be safely reopened.
US President Donald Trump stated that Washington would end its military campaign and lift the blockade if Iran agreed to the points discussed. However, he also issued a stern warning that attacks could resume if Iran rejected the agreement.
Meanwhile, pressure on Trump is mounting as the surge in retail energy prices in the US begins to burden consumers. Furthermore, Trump's meeting with Chinese President Xi Jinping on May 14-15 in Beijing also makes Washington keen to prevent the Iran conflict from disrupting global stability ahead of the meeting.
5 Key Points:
- Oil prices stabilized after previously falling nearly 8%.
- Brent moved above US$102, while WTI was near US$96.
- The US submitted a new proposal to gradually reopen the Strait of Hormuz.
- Iran has not yet made a final decision, so the market is still waiting for confirmation.
- Oil prices remain sensitive because Hormuz is not completely secure and the blockade is still in place. (asd)
Source: Newsmaker.com
