Iran Peace Stallion, Oil Remains Supported
Oil prices are strengthening and heading for a weekly gain, as the Strait of Hormuz remains effectively closed and efforts to end the Iran war show no progress. Brent is on track to gain nearly 6% over the week, while the market assesses that energy supply disruptions could last longer than initially expected.
At 12:10 p.m. Singapore time, the July Brent contract rose 1.3% to US$107.09 per barrel. The June WTI contract rose 1.4% to US$102.57 per barrel, confirming the persistence of a risk premium despite the volatile trading session.
On the geopolitical front, messages from Washington are mixed. In an interview following his meeting with Chinese President Xi Jinping, US President Donald Trump said the US “doesn’t need” an open Hormuz, but in a follow-up meeting in Beijing, he also reiterated that the US wants Iran to be denuclearized and “wants an open strait.” The White House said the Iran-Hormuz war was discussed, while China’s official summary did not list energy as a topic, although it did mention Middle East issues.
While diplomacy remains stalled, conditions on the ground remain fragile. A ceasefire in place since early April has held despite several flare-ups, but Washington and Tehran are not seen as close to a deal. A US naval blockade of Iranian ports remains in effect, and shipping security risks have increased after a commercial vessel was reportedly seized by unauthorized parties at the entrance to Hormuz and taken to Iranian waters.
Supply fundamentals are adding to the tight bias. The International Energy Agency (IEA) stated that the market could remain “seriously undersupplied” until October even if hostilities end next month. The Energy Information Administration (EIA) also reported that crude oil and fuel flows through Hormuz fell by nearly 6 million barrels per day in the first quarter after the conflict erupted in late February, increasing supply uncertainty, including for natural gas to global customers.
With only a trickle of tankers leaving the Persian Gulf since the conflict began, the physical market is starting to look for alternative routes. Vitol is said to be offering buyers Iraqi oil held outside Hormuz, signaling that some cargoes may be making it out even though the main flow remains congested. The market's next focus will be on inventory and export data, developments in shipping security, and signals regarding US-Iran diplomacy and China's role—as the resilience of oil prices above US$100 remains a key channel for inflation risk and interest rate expectations. (asd)
Source: Newsmaker.id
