Brent and WTI Volatile, Hormuz Remains Key
Oil prices were relatively stable on Friday (May 29), but remained on track for their biggest weekly decline since early April following reports that the US and Iran had reached a preliminary agreement to extend the ceasefire. Brent for July fell 34 cents (0.3%) to US$94.05 per barrel at 08:10 GMT, while WTI was flat at US$88.89, after both had fallen more than 1% earlier in the session.
On a weekly basis, Brent fell around 9%, its sharpest decline since the week ending April 6. WTI weakened nearly 8%, its biggest weekly decline since the week ending April 13. The market believes the potential reopening of the Strait of Hormuz could reduce the supply risk premium that has been boosting prices.
Reuters sources said the US and Iran reached an agreement on Thursday to extend the ceasefire and ease shipping restrictions in Hormuz, although President Donald Trump's approval has not yet been issued and Iranian state media stated that the deal has not been finalized. This situation has kept prices volatile and heavily influenced by headlines.
In recent sessions, Brent and WTI have fluctuated wildly, hovering around US$6 amid mixed signals about the end of the Iran war and the possible reopening of the Hormuz Strait, a waterway that previously transported about a fifth of global oil and LNG supplies. Shipping flows through the chokepoint remain well below pre-conflict levels, and ING believes its reopening could provide immediate relief, but a full recovery remains uncertain.
On the demand side, Japan—which relies heavily on Middle Eastern oil—recorded a 66% drop in crude oil imports last month compared to April of the previous year, highlighting the impact of supply disruptions on major importers. From the US, EIA data showed crude, gasoline, and distillate stocks fell last week as refinery and consumer demand improved, while exports fell by 1.16 million bpd to 4.4 million bpd, providing a cushion for prices despite the bearish weekly sentiment. (Arl)
Source: Newsmaker.id
