Oil Steady, US-Iran Deal Optimism Holds Rally, But Hormuz Risks Remain Unabated
Oil prices held steady on Friday (June 5th) after posting their first decline this week, as the market weighed optimism about US-Iran peace talks amid uncertainty about an Israel-Lebanon ceasefire. Brent held around US$95/barrel after dropping 2.8% on Thursday, while WTI hovered around US$93/barrel.
Sentiment improved after President Donald Trump said talks with Iran were going "well," even though Tehran-backed Hezbollah rejected the US-brokered Lebanon ceasefire. The market saw the constructive-sounding headline as trimming some of the "war premium," but not enough to erase the risk premium as realization on the ground remains fragile.
On a weekly basis, WTI is still up more than 6%, reflecting how quickly the market shifted from optimism to caution as negotiations yielded mixed signals. However, the oil contract remains down by about a fifth since early April, when the US and Iran briefly agreed to a ceasefire that halted more than five weeks of fighting.
Analysts believe the significant drop from the pre-ceasefire peak is the "easy part" because the market is relieved that a major war has not erupted and the region's oil infrastructure is relatively intact. Further decline will depend on one thing: a truly visible recovery in shipping volumes in the Strait of Hormuz, not just political statements. As long as ship traffic remains limited, supply risks remain, limiting the scope for a deeper correction.
Supply risks also arise from an operational perspective: Oman's main oil export terminal at Mina Al Fahal reportedly suspended loading after an explosion disrupted port operations. This is a concern because the facility is located outside Hormuz and is one of the export routes still active amid the conflict. With market conditions still "headline-driven," any physical disruption like this could quickly increase price volatility. (asd)*
Source: Newsmaker.id
