Oil Settles Higher On Iran Strikes
by Bloomberg | Paul Burkhardt, Mia Gindis
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Oil prices climbed as US-Iran tensions escalated and peace talks stalled.
Oil rose for a third day as a fresh exchange of strikes between the US and Iran cast doubt on the prospects of a peace deal that would reopen the Strait of Hormuz.
West Texas Intermediate crude rose 2.4% to settle near $96 a barrel, extending its gain so far this week to about 9.6%. Shortly after hitting an empty oil tanker heading to Iran on Tuesday, the US military said it came under missile and drone attack. Iran targeted the US’s main naval base in the region, located in Bahrain, and another airbase in Kuwait.
Earlier this week, Iran and the US offered differing views on the prospects of a peace deal, adding to oil price volatility. Israel’s fight in Lebanon has also posed an additional layer of complexity to the peace talks.
The lack of clarity over the potential extension of the current ceasefire — and the future of flows through the Strait of Hormuz — has buffeted oil prices, which fell last month on optimism that a deal could be reached. The delay in a resolution is raising concerns that the world will need to tap crude inventories further as it waits for Persian Gulf exports through the vital chokepoint to fully resume.
As talks drag on, the world’s supply cushion is rapidly running out.
US government data showed nationwide petroleum stockpiles fell for eight straight weeks, the longest streak since early 2022. Crude stocks at Cushing, Oklahoma, the delivery point for benchmark US futures, fell for a sixth straight week, approaching what is known as a minimum operating level.
As Wednesday’s trading session approached the close, a report by Iran’s semi-official Tasnim news agency said that communication with US is still on-going, but no progress has thus far been made in negotiations.
“Uncertainty is the name of the game right now — but the chances of a believable peace deal remain low as long as there is no agreement on Iran’s highly enriched uranium, the Strait of Hormuz itself and Lebanon,” said Rabobank Energy Strategist Florence Schmit.
Trump wants Iran to put specific nuclear concessions in writing as part of a preliminary agreement to end the war, ABC News reported, citing people familiar with the matter. Tehran had earlier given verbal assurances that it would agree to certain terms related to their nuclear program, according to the report.
In Russia, air defenses shot down 59 drones over the Leningrad region around St. Petersburg, Governor Alexander Drozdenko said. Ukrainian President Volodymyr Zelenskyy said on a post on the X platform that his forces had struck the Petersburg Oil Terminal and military targets at Russia’s Kronstadt naval base.
Price volatility has forced dealers to scale back their risk exposure, pushing open interest — the total number of futures contracts that haven’t been closed, liquidated or delivered — in global benchmark Brent to the lowest since August.
As oil inventories in the US slump to the lowest in a year, investors are increasingly concerned that there is not enough cushion for a prolonged disruption of flows via the Strait of Hormuz.
“Our drone data through the first half of this week points to a continued descent,” said Matt Smith, Americas lead oil analyst at market intelligence firm Kpler, referring to stockpiles at the Cushing storage hub.
Oil Prices
- WTI for July added 2.4% to settle at $96.02 a barrel in New York.
- Brent for August rose 1.9% to settle at $97.81 a barrel.
by Bloomberg | Paul Burkhardt, Mia Gindis
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas