Brent, WTI Slip In Volatile Trade
by Bloomberg | R.W. Neo, A. Longley, M. Gindis
Click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Oil edged lower in choppy trading as investors weighed President Donald Trump’s newest threat to resume strikes on Iran, a pledge the US leader has made repeatedly before backing off since a truce was agreed to in early April.
West Texas Intermediate dropped toward $104 a barrel. Trump said on Tuesday that if Iran didn’t agree to US peace terms, “we may have to give them another big hit.” The threat came less than a day after he said he had just called off an attack. It’s a familiar refrain for traders navigating a 12th week of war-driven volatility, with many reluctant to add to long positions without firmer evidence that fighting will resume.
The commodity declined further on news that NATO is discussing the possibility of helping ships pass through the Strait of Hormuz if the vital energy shipping route isn’t reopened by early July.
Investors have increasingly priced in a closure lasting beyond July, according to a Goldman Sachs poll earlier this month, meaning a NATO-led effort to guide ships through the chokepoint could bring supply back to market faster than expected.
Oil has rallied recently on uncertainty about the latest round of peace talks, and the possibility that the near-total closure of Hormuz will choke off Persian Gulf energy supplies for longer. The conflict has roiled markets and caused global energy prices and inflation to surge. Brent, the global benchmark, is up more than 50% since the US and Israel launched the war.
“These hot air verbal interventions from Trump used to have a heavy bearish impact on prices, but they now seem to have less and less effect unless they are backed by reality,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “As far as we can see there has been no real progress in the negotiations between the US and Iran, with both sides still standing by their previous demands.”
Iran has so far refused to bow to Trump’s demands and has kept shipping through Hormuz largely blocked.
Adding to the pressure on the waterway, a US naval blockade of Iranian ports has left Iran’s Kharg Island oil terminal idle for at least 10 days. That has cut off Tehran’s petroleum revenues and withdrawing millions of barrels from the market. That’s a reversal for the Islamic Republic, which had been the strait’s dominant crude exporter after barring other nations’ vessels.
Oil pared losses ahead of settlement after the Wall Street Journal reported that the US seized an Iran-linked ship, while peace talks yielded little progress, according to regional mediators and US officials familiar.
Earlier there were reports of explosions on Iran’s Qeshm Island, one of the areas ships have to pass when crossing Hormuz. The semi-official Tasnim news agency reported that the blasts were the result of neutralizing unexploded munitions.
Meanwhile, the US issued a new waiver allowing the sale of Russian crude oil and petroleum products that are already loaded on tankers, days after the previous one lapsed. Trump also said he may consider initiatives outside of a federal gas tax suspension to keep pump prices lower.
Separately, White House officials are holding firm against restricting oil exports even as domestic stockpiles dwindle.
Oil Prices
Oil settled lower as traders weighed renewed US threats against Iran.
- WTI for July delivery fell 23 cents to settle at $104.15 a barrel in New York.
- The less-active June contract expires Tuesday
- Brent for July dipped 82 cents to settle at $111.28 a barrel.
by Bloomberg | R.W. Neo, A. Longley, M. Gindis
Click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas