Oil Falls 2%, All Because of This One Trump Move!
Oil prices weakened on Tuesday in Asia (May 19) after US President Donald Trump said he was holding off on plans to attack Iran to allow negotiations to end the war. This move eased some of the short-term risk premium, although the market believes supply disruptions have not completely disappeared.
At 03:52 GMT, Brent crude for July fell US$2.26, or 2%, to US$109.84 per barrel. WTI crude for June fell US$1.22, or 1.1%, to US$107.44. The day before, both benchmarks had touched their highest levels since May 5 and April 30, respectively.
Technical factors also added to volatility as the WTI crude for June expired on Tuesday. The most active WTI crude contract (July) fell US$1.63, or 1.6%, to US$102.75 per barrel, indicating the market is beginning to adjust its positioning for the next contract.
Trump said there's a "very good chance" the US could reach a deal with Iran to prevent Tehran from acquiring nuclear weapons. However, analysts say the market is uncertain whether this is a genuine change of heart or simply a tactical pause. Tim Waterer of KCM Trade said the next key will be Iran's response and the facts on the ground: how much tanker movements in the Strait of Hormuz actually improve.
On the supply side, the Middle East conflict still effectively closes the Strait of Hormuz, a passage that normally carries about a fifth of the world's oil and LNG supplies. Iran has communicated its position to the US through Pakistan, but progress is said to be slow. The issue of sanctions also remains confusing: Iranian media reported the US would grant a waiver for Iranian oil exports during negotiations, but US officials denied this. Separately, US Treasury Secretary Scott Bessent extended the sanctions waiver by 30 days to allow "energy-vulnerable" countries to continue purchasing Russian oil via sea.
Meanwhile, the US is again using its emergency reserves. Department of Energy data shows 9.9 million barrels were withdrawn from the Strategic Petroleum Reserve last week, lowering stockpiles to about 374 million barrels (the lowest since July 2024). The market now awaits official EIA inventory data on May 20, after a Reuters survey estimated US crude oil stocks fell by around 3.4 million barrels in the week ending May 15.
5 key points:
- Oil fell after Trump postponed an attack on Iran to open up negotiating space.
- Brent July US$109.84 (-2%); WTI June US$107.44 (-1.1%) at 03:52 GMT.
- Volatility influenced by the expiration of the WTI June contract; WTI July US$102.75 (-1.6%).
- Hormuz remains effectively closed; the market is awaiting Iran's response and evidence of tanker movements.
- Ayu from Newsmaker estimates that although tensions have eased, the risk of conflict escalating remains. The situation remains full of uncertainty, and the risk of escalation remains open and could trigger further volatility, especially in oil, the US dollar, and gold. (asd)*
Source: Newsmaker.id
