Oil Falls, Israel-Iran De-escalation Eases Risk Premium
Oil prices weakened after Israel and Iran signaled they would halt attacks on each other, easing market concerns that the conflict would escalate and derail efforts to end the Middle East war. Brent fell to near US$93/barrel, while WTI hovered around US$90/barrel in Tuesday's trading.
Israeli Prime Minister Benjamin Netanyahu said his country was holding fire on Iran temporarily but would respond if Tehran attacks again. Iranian media echoed similar sentiments. However, the ceasefire is considered fragile as broader negotiations have yet to produce a clear breakthrough.
The biggest factor preventing further declines is the Strait of Hormuz, which remains "locked" by a dual blockade between Iran and the US. This situation limits the supply of crude oil, fuel, and gas to global markets, leaving the market with a risk premium despite the easing of military escalation.
Regional risks are also evident in shipping security incidents. The US military said it disabled an empty tanker in the Gulf of Oman after the vessel attempted to reach an Iranian port and was deemed to have violated the blockade. At the same time, the Israeli military reported intercepting suspicious air targets from Yemen, indicating that the cross-front threat has not disappeared.
On the demand side, disruptions from war are also putting pressure on global physical flows. China reportedly recorded a sharp drop in oil imports last month to its lowest level in more than eight years, as supply disruptions caused refineries to hold back purchases, relying on stocks and cutting processing rates. Even if a US-Iran peace deal is reached, normalizing supply will still take time as mines in Hormuz must be cleared, shut-in fields restarted, and damaged energy infrastructure repaired.
Against this backdrop, oil prices remain highly headline-driven: prices can fall on signs of de-escalation, but they are still susceptible to rebounds on news of supply disruptions or new escalations. During this session, Brent (Aug) fell around 0.8% to US$93.48, while WTI (Jul) fell 1.2% to US$90.21 in Singapore trading. (Asd)*
Source: Newsmaker.id
