Oil Steady, Hormuz Risks and US–Iran Diplomacy in Focus
Oil prices were nearly flat on Thursday (June 11th) as investors weighed two conflicting signals: the escalation of the US–Iran war, which threatens energy supplies, and reports that the two sides were still exchanging messages regarding the possibility of an initial agreement. Brent edged down 0.1% to US$92.98/barrel, while WTI rose 0.1% to US$90.10/barrel.
Market sentiment remained tense after President Donald Trump warned that the US military would hit Iran “very hard” and stated that Washington would eventually take control of Iran’s oil and gas infrastructure. Meanwhile, three Iranian sources and a European official said the US and Iran were still discussing details of the memorandum, including the mechanism for releasing frozen Iranian funds.
The Strait of Hormuz has become a major focus. Iran’s military command announced the closure of the waterway to oil tankers and commercial vessels, warning that any ships attempting to pass through would face attacks. The waterway is crucial as it handles about 20% of global oil and gas shipments, so a prolonged disruption could tighten global supplies.
However, claims on the ground remain conflicting. The US military stated that commercial vessels are still entering and exiting the Strait of Hormuz and denied Iranian media reports that US warships were attacked. LSEG and Kpler data also indicate that several LNG tankers managed to exit the Strait of Hormuz with their transponders turned off and headed for Asia, although the timing is unclear.
The oil rally was also restrained by signs of weakening Chinese demand. Data showed gasoline and diesel consumption falling, while crude oil imports were also lower. Furthermore, some Asian buyers are still receiving supplies, including from ADNOC, and Indian refiners said they have secured enough oil to last until at least August.
Fundamentally, the market remains tight. The EIA reported that US crude oil inventories fell by 7.2 million barrels to 426.5 million barrels, more than expected for a 4 million barrel decline. OPEC production in May also fell to its lowest level in more than two decades due to the Hormuz blockade and disruption. For now, oil's direction will depend on whether diplomacy can contain the escalation, or whether the Hormuz disruption truly spreads.
Source: newsmaker.id
