Oil Prices Trim Gains After Trump Delays Iran Strike
Oil prices pared gains on Monday (May 18) after U.S. President Donald Trump said he was delaying a planned military strike on Iran, following requests from several Middle Eastern countries and claims that “serious negotiations” were underway. The statement eased some of the risk premium that had accumulated in energy markets.
At 3:45 p.m. ET, the July Brent contract fell 0.2% to $109.09 per barrel. July WTI rose 0.9% to $101.90 per barrel, reflecting continued volatility in trading amid the tension between escalation risks and hopes for diplomacy.
Prices had previously rallied as the U.S.-Iran standoff remained unresolved, a new drone incident in the Gulf kept tensions high, and the Strait of Hormuz remained virtually closed to energy flows. The risk of physical supply disruptions was a market focus, especially as shipping from the Gulf plays a significant role in global oil supplies.
Trump stated that he ordered the U.S. military to postpone the strikes originally scheduled for Tuesday, following requests from Qatar, Saudi Arabia, and the United Arab Emirates. However, he emphasized that the military must remain ready to launch a large-scale strike "at a moment's notice" if an acceptable agreement is not reached, and emphasized that a deal must ensure Iran does not acquire nuclear weapons.
The two sides remain divided on key issues. Washington demands that Iran abandon its nuclear ambitions, hand over its enriched uranium, and reopen Hormuz. Iran demands a cessation of hostilities on all fronts, compensation for war damages, and an end to the US naval blockade of its ports and coastline, while rejecting demands to end nuclear activities, a key point of contention.
For the market, this dynamic is crucial because energy supply risks directly impact the inflation outlook and interest rate expectations. Sustained high oil prices could intensify price pressures and push the market back up bets on tighter policy. The focus will now be on concrete signals from the negotiation process, the operational status of Hormuz, and developments in security incidents in the Gulf that could trigger rapid changes in oil risk premiums.
Source: Newsmaker.id
