Oil Holds Lower Below $111
Oil prices held lower on Wednesday (May 20), with Brent at $110.72/barrel and WTI at $103.75/barrel, as investors weighed President Donald Trump's latest threat of an attack on Iran. Although Trump stated that the war could end soon and that Iran wants to reach a deal, the market remained cautious as previous threats of an attack often go unfulfilled.
The market assessed that the current risk of military escalation was not yet pressing enough to drive oil prices higher. Trump mentioned the possibility of military action in the next two to three days, while analyst Vishnu Varathan of Mizuho Securities emphasized that the market would need a more concrete threat for a significant price reaction.
Middle East tensions continue to pressure supplies through the Strait of Hormuz, which has driven up global energy prices and inflation. The US also seized an Iran-linked tanker, adding to supply. Meanwhile, NATO's plan to escort ships if the route remains closed could limit medium-term supply risks.
Oil movements are also influenced by global financial market conditions. The rise in the 10-year US Treasury yield above 4.5% prompted investors to reassess risk expectations, thus curbing further oil gains. The large trading volume of 134 million Brent put options also did not increase market caution.
On the geopolitical front, the meeting in Beijing between President Xi Jinping and President Vladimir Putin emphasized calls for a ceasefire in the Middle East, including Iran and Ukraine, adding to cautious sentiment in the energy market.
Meanwhile, White House officials remain resistant to selling US oil exports despite a significant drop in domestic stockpiles, around 9.1 million barrels last week, which, if confirmed, would be the largest decline since September.
Overall, oil prices traded little and remained under pressure from a combination of geopolitics, inflation, and rising bond yields. The market is awaiting further developments in the Middle East and NATO connectivity measures to determine the direction of future movements. (asd)
Source: Newsmaker.id
