Oil Rises, US-Iran Peace Tested Again!
Oil prices rose in early trading on Monday (June 22nd) after US President Donald Trump threatened to attack Iran if Hezbollah continued its attacks on Israel. This threat renewed market concerns about the continuation of the peace process between Washington and Tehran, even though high-level negotiations in Bürgenstock, Switzerland, continued into early Monday.
Brent crude rose as much as 2.2% to $82.30 per barrel before trading up 1.4% to $81.69 per barrel at 8:05 a.m. Singapore time. WTI for August delivery rose 2.5% to $77.78 per barrel. This increase indicates the market is still placing a risk premium on oil as the Middle East conflict has not yet fully subsided.
The US-Iran talks began in volatile conditions. Iranian media initially reported that Tehran had suspended negotiations following Trump's threat, but sources familiar with the process said the talks were ongoing. Key issues discussed included mechanisms to ensure the Strait of Hormuz remains open and how to enforce a ceasefire between Israel and Hezbollah in southern Lebanon.
The Strait of Hormuz remains a focal point for global energy trade. Despite Iran's repeated claims of closing Hormuz, millions of barrels of oil continued to flow through the Strait over the weekend. Before the war began in late February, about a fifth of global LNG exports passed through Hormuz, so the risk of disruption to this route has boosted prices for European natural gas, US gasoline, and diesel.
On the supply side, Persian Gulf producers are preparing to increase production if the situation improves. Kuwait has lifted its force majeure status, while Abu Dhabi National Oil Co. is asking customers to resume loading oil from Persian Gulf ports. However, a full reopening of Hormuz could also create new pressures, with approximately 80 million barrels of oil potentially entering the market at a time of weak demand from China.
The five key points of this movement are Trump's threat to increase the oil risk premium, the fragile nature of US-Iran negotiations, Hormuz remaining a key global supply hub, Gulf producers preparing for an export recovery, and the risk of oversupply if the Strait is fully reopened too quickly. The next focus will be on the outcome of the Swiss negotiations, Israel and Hezbollah's adherence to the ceasefire, the actual volume of ships in Hormuz, and the response of Gulf producers to the restoration of energy flows. (asd)*
Source: Newsmaker.id
