Oil Rises, US-Iran Deal Remains Stalled
Oil prices rose on Monday alongside a strengthening US dollar, as negotiations to extend the US-Iran ceasefire showed no signs of a breakthrough. The rally came amid renewed geopolitical tensions, particularly as talks to reopen the Strait of Hormuz are seen as progressing slowly.
Brent crude rose above US$93 per barrel, rebounding from its lowest close since mid-April. Meanwhile, West Texas Intermediate (WTI) rose 2.7% to US$89.69 per barrel. This rise came after oil recorded its sharpest monthly decline in more than six years, making the latest rebound a test of whether the market is beginning to reassess supply risks and geopolitical premiums.
A safe-haven tone was also evident in the foreign exchange and bond markets. The dollar strengthened slightly against all major G-10 currencies, while US Treasury yields moved up across the curve. The benchmark 10-year yield rose about three basis points to 4.46%, signaling that investors are reconsidering the possibility of energy-based inflationary pressures if supply disruptions or transportation costs increase.
Geopolitical conditions over the weekend added another layer of risk. An Iranian ballistic missile attack on a Kuwaiti airbase reportedly caused minor injuries to several US citizens, while Israel escalated its offensive against Hezbollah in Lebanon. On the diplomatic front, the US and Iran exchanged messages proposing amendments to a draft agreement to extend the ceasefire and open the Strait of Hormuz, but progress remains questionable.
Several market participants believe this uncertainty has the potential to maintain high volatility. Kyle Rodda of Capital.com stated that US-Iran negotiations remain a source of risk that could trigger price movements, particularly as the market needs to discern between political signals and real progress at the negotiating table. US media reports also stated that President Donald Trump had expressed readiness to make a "final decision" on the initial agreement, but the meeting in the Situation Room ended without a decision.
For the market, the primary channel remains the same: Middle East tensions risk driving up the oil risk premium, which in turn could amplify concerns about energy inflation and influence interest rate expectations. Variables to monitor this week include the direction of US-Iran negotiations and the status of the Strait of Hormuz, regional security escalations, the response of the US dollar and yields, and global demand signals—including data on slowing Chinese factory activity in May. (asd)*
Source: Newsmaker.id
