US-Iran Peace Prospects Dim; Brent Rally Holds Steady
Oil prices maintained their rally during Tuesday's trading (Aug 18) as prospects for a quick resolution to the US-Iran conflict faded further. Brent traded around US$91 per barrel—having posted sharp gains since early August—while WTI hovered near US$84.95 per barrel. The market continues to price in a high risk premium as disruptions in the Strait of Hormuz persist.
Tensions flared again after a vessel was reportedly struck by an unidentified projectile while exiting the Strait of Hormuz. The attack caused engine room damage and resulted in crew casualties. This latest incident underscores the continued high-risk nature of this strategic shipping lane.
Diplomatic prospects also remain bleak. President Donald Trump stated he has no interest in extending the interim agreement with Iran, which expired on Monday. Washington and Tehran remain deeply divided over the management of the Strait of Hormuz, while Iran's talks with Oman have not involved the United States.
Despite high geopolitical risks, Gulf producers are actively seeking ways to maintain export flows. Saudi Arabia is reportedly offering oil cargoes from locations outside the Strait of Hormuz, following the United Arab Emirates' move to divert some supplies. These measures have helped temper the oil rally, preventing prices from surging too aggressively.
Washington has also signaled a long-term strategy regarding Iran involving increased economic pressure, including potential new sanctions. Meanwhile, the market awaits US oil inventory data from the API and subsequent official reports, following a surprise rise in stocks previously.
Newsmaker Analysis: As long as attacks on vessels continue and US-Iran diplomacy remains deadlocked, Brent is likely to hold its ground in the US$90–US$92 range. Should tensions escalate and disruptions in the Strait of Hormuz worsen, prices could potentially climb toward US$95 or even US$100. Conversely, if Gulf exports remain uninterrupted and US stockpiles rise again, Brent could see a correction to the US$88–US$89 range. (arl)
Source: Newsmaker.id
