Oil Rises, Trump Doubts US-Iran Ceasefire
Oil prices continued to rally after US President Donald Trump cast doubt on the sustainability of the ceasefire with Iran and rejected Tehran's latest peace offer, extending the "near-closed" Strait of Hormuz. Brent traded near US$105 per barrel after rising 2.9% in the previous session, while WTI hovered near US$99.
Trump said in the Oval Office that the ceasefire was on "massive life support" while criticizing Iran's response to a US proposal to end the 10-week war. Although the ceasefire has been in effect since early April and has held despite a number of incidents, including attacks on ships, disruptions in Hormuz continue to depress the flow of oil, gas, and fuel to global markets, fueling concerns about an inflation crisis.
According to sources familiar with the discussions, Iran is demanding that the US lift its naval blockade and ease sanctions, while maintaining some degree of control over traffic in the Strait of Hormuz. Bloomberg Economics assesses a comprehensive peace deal as unlikely, and the risk of a return to violence remains, although the intensity is expected to be temporary before declining to a more "normal" low-level conflict in a protracted conflict.
In Washington, Axios reported that Trump will meet with his national security team to discuss the war, including the possibility of resuming military action. Trump also told Fox News that he is considering reviving the plan to escort ships through Hormuz. Domestically, surging US fuel prices are adding to political pressure ahead of the November midterm elections, while the US government is again releasing emergency oil to cushion price increases.
Saudi Aramco said the global market is losing about 100 million barrels of supply per week due to the Hormuz disruption. However, indicators of market strength are starting to weaken as refiners reduce purchases: the Brent prompt spread has narrowed to around US$4 per barrel (backwardation) from nearly US$10 early last month. As of Tuesday afternoon in Singapore, July Brent rose 0.9% to US$105.15, while June WTI rose 1.1% to US$99.11. (asd)
Source: Newsmaker.id
