Brent Rises Sharply, Watch Out for Its Next Direction!
Oil prices rose sharply after US President Donald Trump rejected Iran's latest response to a ceasefire proposal, continuing disruptions in the Strait of Hormuz and keeping global energy supplies tight.
Brent briefly strengthened as much as 3.5% to US$104.80/barrel, while WTI rose to near US$99. At 7:45 a.m. Singapore time, Brent for July settlement rose 3.1% to US$104.39, and WTI for June delivery rose 3.1% to US$98.35.
Disruptions in shipping through Hormuz since late February have restricted the flow of oil, gas, and fuel, pushing up energy prices and fueling inflation concerns. Tensions are also considered fragile following a drone attack that set fire to a cargo ship off Qatar, while the UAE and Kuwait admitted to intercepting the drones.
In terms of market expectations, Saudi Aramco stated that market normalization could only occur in 2027 if shipping restrictions continue for more than a few weeks, although the company has already diverted some flows through the port of Yanbu. A Goldman Sachs survey also showed that a majority of respondents expect flow disruptions in Hormuz to extend beyond the end of June, with total flows remaining well below pre-war levels despite some tankers successfully diverting.
Physical market indicators strengthened: July Brent contract trading volumes surged early in the session, and the prompt spread widened by around US$4/barrel in backwardation, reflecting tight supply conditions. The market is also monitoring geopolitical developments, including the Israeli Prime Minister's statement that the conflict is "not over" and the Trump-Xi meeting agenda, which could potentially raise the issue of China's support for Iran.
5 key points:
- Oil surged after Trump rejected Iran's response, extending the Hormuz disruptions.
- Brent rose by 3.5% (around US$104–105), WTI rose by around 3% (around US$98–99).
- Supply disruptions through Hormuz maintain the risk of inflation and tight global energy supplies.
- Expectations of prolonged disruption: Aramco says normalization could be in 2027; Goldman survey sees disruption extending beyond the end of June.
- Physical market signals are strengthening: prompt spread backwardation is around US$4/barrel and early-session trading volumes are surging. (asd)*
Source: Newsmaker.id
