Oil Falls, Market Remains Volatile Amid Hormuz Uncertainty
Oil prices reversed lower on Tuesday (June 2nd) after a sharp surge in the previous session, as market participants weighed uncertainty surrounding US-Iran negotiations and the prospect of normalizing shipping through the Strait of Hormuz.
Brent fell around 1.6% to US$93.46 per barrel, while WTI weakened 1.6% to US$90.73 per barrel, erasing some of Monday's roughly 5% gain.
Volatility remained high as the market still priced in a risk premium related to potential supply disruptions from the Persian Gulf. Prices briefly rose earlier in the week following reports that Iran had suspended indirect talks with Washington, before pressure eased when US President Donald Trump said talks were ongoing and left open the possibility of a memorandum of understanding to reopen Hormuz in the near future, although several issues were said to be unresolved.
For energy markets, the lack of a solid diplomatic track has led to headline-driven price movements: any indication of escalation widens the risk premium, while signals of a swift de-escalation trigger profit-taking after a rally. Within the macro transmission channel, volatile oil maintains uncertainty about the path of inflation and—ultimately—interest rate policy expectations, potentially spilling over to the dollar and global risk sentiment.
Looking ahead, market focus remains on official updates regarding the status of US-Iran negotiations and clarity on shipping operations in the Strait of Hormuz, as these two factors will determine whether energy risk premiums persist or compress again.
Source: Newsmaker.id
