Mixed US-Iran Signals Lead Oil to Gains Again
Oil prices closed higher on Tuesday (June 2nd) after market participants digested conflicting signals regarding the chances of a US-Iran peace deal. WTI rose 1.7% to close at around US$93.76/barrel in New York, while Brent for August rose 1.1% to settle at US$96/barrel.
The gains came after several Iranian media headlines raised doubts about the progress of the negotiations, coupled with an AFP report that Hezbollah would not accept a partial ceasefire with Israel. The Lebanon issue is sensitive because Tehran previously cited a de-escalation there as a crucial condition for a broader agreement.
Tuesday's rally also reversed early session weakness that emerged following Washington's de-escalation comments. Trump told ABC News that a memorandum of understanding (MoU) to reopen the Strait of Hormuz could be reached within a week, but the market considered the situation fragile as key details remained unclear and the parties' narratives frequently changed.
Market focus remains on the Strait of Hormuz, which before the war carried about a fifth of global oil and LNG flows. Despite talks of a deal, visible commercial traffic remains limited, so shipping uncertainty remains high and the supply risk premium is difficult to eliminate.
Uncertainty over the extension of the ceasefire and the future of the Hormuz flow has kept oil prices volatile. The situation is further complicated by Trump and Israeli Prime Minister Benjamin Netanyahu's earlier differing versions of the ceasefire arrangements in Lebanon, while the Lebanese President said further talks would be held Tuesday and Wednesday to extend the ceasefire to the entire region.
High volatility has led dealers to reduce risk exposure, as reflected in open interest on global benchmarks, which has fallen to its lowest level since August. This means the market remains sensitive to headlines: a single "deal is near" can depress prices, but any sign of escalation or deadlock can quickly lift them again. (Arl)*
Source: Newsmaker.id
