Oil Settles Higher on Iran Doubts
by Bloomberg | A. Longley, R.W. Neo, M. Gindis
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Oil edged higher in choppy trading as fresh doubts emerged over the fate of peace negotiations between the US and Iran that could secure the reopening of the critical Strait of Hormuz.
West Texas Intermediate futures rose 3% to close above $108 a barrel and Brent futures closed around $112 a barrel as both sides deemed fresh proposals insufficient to ending the war. Oil pared some gains post settlement when US President Donald Trump said he had called off planned attacks on Iran set for Tuesday at the request of other Middle Eastern countries.
Traders have been bracing for a possible resumption of the fighting that roiled the Middle East earlier in the conflict, prolonging the closure of Hormuz to vital energy flows and risking further damage on infrastructure.
Oil has risen almost 50% since the US and Israel first attacked Iran at the end of February, with deeply reduced flows of crude and liquefied natural gas making its way to buyers around the world. Prices have been extremely volatile, however, with steep drops at times when peace hopes seem to be taking shape.
The market is in “a race against time” as the factors that restrained price rises from the war stand to come under strain if the vital waterway stays closed into June, Morgan Stanley said last week. The International Energy Agency reiterated on Monday that global oil inventories are falling quickly.
Oil prices climbed as Iran peace talks faced new doubts.
Prices were down earlier in the session after Iran’s semi-official Tasnim news agency said the US had offered to lift sanctions on the sale of Iranian oil until a final deal was reached. A US official who refused to be named due to the sensitivity of the matter said the story was false, but didn’t elaborate.
In a similar vein, the US is expected to issue a waiver allowing the sale of Russian crude oil and petroleum products that are already loaded on tankers, according to people familiar, just days after the previous one lapsed. The license will “help stabilize the physical crude market,” wrote Treasury Secretary Scott Bessent in a post on X.
Two of the major solutions in the oil market so far have come from the world’s two largest economies. The US has been exporting record volumes overseas, while Chinese imports have plunged dramatically. Processors in the latter churned through the least amount of oil since 2022, according to data released on Monday.
While a tenuous ceasefire agreed to in April has mostly held, energy facilities were targeted in the Persian Gulf over the weekend. An attack by drones sparked a fire at a United Arab Emirates nuclear facility, underscoring the fragility of the ceasefire.
Still, paper markets remain relatively subdued despite signs of physical tightness. Money managers cut net-long positions in both Brent and WTI last week to the lowest levels since March 3.
“Many traders are still staying sidelined, and managed money length was reduced significantly last week, limiting some of the positioning pressure,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. “Headlines remain the primary driver, but there is a growing focus on fundamentals as the market appears less stressed than many would have expected given the scale of supply disruption.”
Oil Prices
- WTI for July rose 3.1% to settle at $108.66 a barrel.
- The June contract expires on Tuesday
- Brent for July closed 2.6% higher at $112.10 a barrel.
by Bloomberg | A. Longley, R.W. Neo, M. Gindis
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas