US Strikes Lift Brent, Iran Deal Not Yet Imminent
Oil prices rebounded sharply on Tuesday (May 26) after US military strikes on Iran restored supply risk premiums, adding to uncertainty about whether a deal to end the war and reopen shipping through the Strait of Hormuz could be reached in the near future. The gains came a day after a sharp sell-off fueled by diplomatic optimism.
Brent rose US$2.95 (+3.07%) to US$99.09 per barrel at 13:13 GMT, after plunging around 7% on Monday. WTI was at US$92.82, down US$3.78 (-3.91%) from Friday's close; there was no WTI settlement on Monday due to the Memorial Day holiday in the US.
US Secretary of State Marco Rubio said negotiations with Iran could "take a few days," dampening hopes of a quick breakthrough, a day after Washington called the attacks in southern Iran defensive. The market repricing reflects a recurring headline-driven pattern: peace optimism depresses risk premiums, but limited escalation quickly restores them.
The Strait of Hormuz remains a fundamental transmission hub for oil. This material indicates that Iran has effectively stopped nearly all non-Iranian shipping in and out of the Gulf through Hormuz since the war began, thus blocking about a fifth of global oil and LNG flows. Within this framework, any indication of disruption or restoration of access immediately changes physical supply expectations and price volatility.
On the diplomatic front, Iran's top negotiator and foreign minister are in Doha for talks with Qatar's prime minister about a potential deal with the US. Washington and Tehran say progress has been made on a memorandum of understanding that would end the war and give 60 days to reach a final agreement.
However, signals of implementation remain mixed. The Nikkei reports that Iran will clear mines in the strait within 30 days under the deal, after which ships from all countries will be able to pass more freely and safely, and Iran will stop collecting transit fees. At the same time, ship tracking data shows three LNG tankers passing through the strait in recent days bound for Pakistan, China, and India, as well as a supertanker carrying Iraqi oil to China that was previously held up for almost three months, signaling activity is starting to return, though not yet normal.
Execution risks remain high as non-energy issues also enter the negotiations. US President Donald Trump reiterated his demand that Iran hand over enriched uranium for destruction, adding to the potential for a last-minute squabble that could derail the deal. A market analyst from IG believes this serves as a reminder that the deal could still collapse at a late stage, as has happened with previous attempts.
The market's next focus will be the stability of the Doha talks, the details of the Hormuz reopening mechanism (timetable, security, and who will manage traffic), and whether the emerging shipping flows will be sustainable. Until such certainty emerges, oil is likely to remain volatile, with high sensitivity to geopolitical headlines. (Arl)*
Source: Newsmaker.id
