Trump Changes Tone, Oil Prices Rebound
Oil prices weakened on Tuesday (May 19) after U.S. President Donald Trump said he was canceling planned strikes on Iran that were originally scheduled for today, following requests from Persian Gulf allies. The statement eased some of the risk premium, although the market assessed that uncertainty surrounding the conflict and the Strait of Hormuz had not yet subsided.
At 10:13 a.m. London time, the July Brent contract fell 1.5% to US$110.43 per barrel, after rising 2.6% on Monday. The July WTI contract fell 1% to US$103.36 per barrel, while the quieter June contract expires on Tuesday.
Trump stated in a social media post that the leaders of Saudi Arabia, Qatar, and the United Arab Emirates had asked the U.S. to hold off on strikes because “serious negotiations” were underway. However, Trump also reiterated that the U.S. remained prepared to strike if an acceptable agreement was not reached, without setting a deadline.
While the delay reduces the risk of immediate escalation, oil remains sensitive as the market weighs the possibility of an effective closure of the Strait of Hormuz, holding off Gulf supplies for longer. Furthermore, Tehran has not immediately confirmed new talks, making the diplomatic trajectory difficult to predict.
On the supply side, the US naval blockade has idled Iran's main export terminal on Kharg Island for at least 10 days, cutting off Iranian oil revenues and removing millions of barrels from the market. This is a reversal from the early stages of the war, when Iran briefly became the dominant exporter in the strait after restricting foreign shipping.
Beyond Iran, the US also issued a new waiver allowing the sale of Russian crude and oil products already loaded on tankers, days after the previous waiver expired. The market is now waiting to see if negotiations actually move forward, and whether physical flows and shipping security around Hormuz improve—two factors that will determine whether the oil correction continues or volatility rises again. (arl)*
Source: Newsmaker.id
