Brent Jumps on Renewed Iran Clash
by Bloomberg | A. Longley, N. Lua, W. Kubzansky
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*this article was not written by Roseland Oil & Gas
Oil rebounded as fresh clashes between the US and Iran clouded the outlook for an interim deal to reopen the vital Strait of Hormuz.
Global benchmark Brent rose almost 4% to settle below $100 a barrel after slumping more than 7% on Monday. US forces hit targets near the strait, while the Islamic Revolutionary Guard Corps said it fired at multiple US aircraft after they entered Iranian airspace.
Even amid the hostilities, the US continues to tout progress toward a deal to end a war that has upended global energy markets. Secretary of State Marco Rubio has cautioned that any pact would likely take a few days to finalize. If the sides can’t reach an agreement, it would prolong a crisis that has sent fuel prices skyrocketing.
After crude retreated sharply in the week’s opening session on hopes for a deal, markets are once again refocusing on vessel movements and the progress of restarting energy assets, Macquarie Group strategists including Vikas Dwivedi wrote in a note Tuesday.
“Visibility to a durable end of the conflict may be significantly improved, but the underlying situation remains far from resolved,” the strategists wrote.
West Texas Intermediate, the US benchmark, fell almost 3% to settle below $94 a barrel. That decline represented the move from Friday’s price, with markets not settling on Monday due to a US holiday.
The strait, the key waterway through which a fifth of the world’s oil and liquefied natural gas flowed during peacetime, remains essentially closed, subject to blockades by the US and Iran.
The two sides have been negotiating a deal that would see them extend the ceasefire for about two months, with Washington lifting its blockade and Tehran reopening Hormuz. Still, sticking points remain, with Tehran saying it must be able to manage traffic through the chokepoint, something the US, Arab states and Europe maintain cannot be allowed.
The US is also renewing an effort to guide ships through the strait, the The Wall Street Journal reported. The US military later denied the story.
At present, it’s “premature to consider a peace deal will be reached let alone adhered to,” said Saul Kavonic, senior energy analyst at MST Marquee. “There have been claims by both sides of negotiation success, or the strait opening in the past few months already, only for it to not materialize.”
Highlighting additional challenges, Israel said on Monday it would intensify strikes against Iranian-backed Hezbollah in Lebanon. Tehran has demanded an end to hostilities in that country as part of any deal with the US.
With Hormuz still largely closed, global oil inventories have been drawing at a record pace, according to a recent tally from the International Energy Agency. That’s put the spotlight on the US, where holdings — commercial and strategic combined — have been contracting at an unprecedented clip.
Meanwhile, Russia is weighing curbs on diesel exports, according to Interfax. The country is a key exporter of the fuel.
Oil Prices
Oil rebounded as renewed US-Iran clashes clouded hopes for a Hormuz deal.
- Brent for July settlement rose 3.6% to settle at $99.58 a barrel.
- WTI for July delivery fell 2.8% to settle at $93.89 a barrel.
- There was no settlement on Monday due to a US holiday.
by Bloomberg | A. Longley, N. Lua, W. Kubzansky
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas