Risk Premium Rises Again, Oil Posts Biggest Gain Since May
Oil prices posted their biggest daily gain since early May on Monday (June 1), as the market reintroduced a risk premium that energy flows from the Middle East could be further disrupted. Brent rose about 4.3% to close near US$95 per barrel, after briefly touching above US$97 following a Tasnim report that Iran had halted negotiations with the US in protest of Israel's expanding ground offensive in Lebanon.
Tasnim also said the "Axis of Resistance" was considering closing the Bab el-Mandeb Strait, a vital waterway at the southern end of the Red Sea that has served as an alternative route when the Strait of Hormuz remains heavily blocked. This added risk heightened market concerns, as existing supply disruptions were still considered significant, with some industry players warning that the impact of the Hormuz closure could persist until the end of the year even if the strait were reopened quickly.
Some of the rally stalled after US President Donald Trump said talks with Iran were proceeding "rapidly." Trump also claimed that Israel and Hezbollah had agreed to halt attacks on Lebanon—an issue Iran had previously cited as a key condition for a broader agreement. However, the market still views the diplomatic path as fragile, and headlines remain volatile.
Monday's gains saw oil recover nearly half of last week's losses, when prices plunged more than US$10 per barrel on hopes that a deal would restore tanker flows through Hormuz. Since the war began in late February, a sharp slowdown in shipping through the vital waterway has pushed Brent up more than 30%, so any sign of additional supply risks immediately triggers a price reaction.
Outside the Middle East, other supply factors are also playing a role. Ukraine recorded a record attack on Russian refineries in May, while Russia banned jet fuel exports until November to avoid domestic shortages. This combination of risks keeps the oil market sensitive to geopolitical shocks on several fronts.
At the close, the July WTI contract rose 5.5% to close at US$92.16 per barrel in New York, while the August Brent contract rose 4.2% to close at US$94.98 per barrel. (Arl)
Source: Newsmaker.id
