Oil Rises, Iran Negotiations Further Stalled
World oil prices rose again on Friday (May 15) after recent comments from US President Donald Trump and Iranian Foreign Minister Abbas Araqchi dampened market hopes for a peace deal.
Brent crude rose 2.4% to US$108.22 per barrel, while West Texas Intermediate (WTI) rose 2.4% to US$104.03 per barrel. Over the week, Brent has risen 6.8%, while WTI has surged 9.0%.
The rise in oil prices is still driven by uncertainty surrounding the Strait of Hormuz, a vital route for global energy trade. The tone of communication between the US and Iran has become increasingly harsh after Trump expressed his growing patience with Tehran. Iran, on the other hand, has expressed its distrust of the US and is only willing to negotiate if Washington is serious, although Tehran has also stated that it remains ready for a diplomatic solution.
From a market perspective, Trump's meeting with Chinese President Xi Jinping has not yet provided a strong signal that the Strait of Hormuz will be fully reopened. Trump said he and Xi agreed that Iran should not possess nuclear weapons and that the Strait of Hormuz should be open. However, Xi did not comment directly on the talks, while China only emphasized that the conflict should not have occurred and has no reason to continue.
In opinion, the current oil rally is driven more by geopolitical sentiment than by major changes in physical supply. Iran says 30 vessels have passed through the Strait of Hormuz, but that figure is still far from the pre-war normal of around 140 vessels per day. As long as US-Iran negotiations remain deadlocked, attacks on vessels continue, and the Strait of Hormuz has not fully recovered, oil prices have the potential to remain high.
Consequently, the global market needs to be aware of the risks of energy inflation, pressure on production costs, and the possibility of central banks maintaining tight interest rates for longer.
Source: newsmaker.id
