Oil gains as deal to end war and reopen Hormuz remains elusive.
Oil edged higher as the US and Iran remained at odds over how to reopen the Strait of Hormuz, with the war entering its fourth month.
US benchmark West Texas Intermediate rose toward US$90 a barrel, after slumping more than 5% on Wednesday, while Brent was near US$94. President Donald Trump said he was “not satisfied” with negotiations, with the White House denying an Iranian report on a draft agreement that said Tehran and Oman would oversee shipping in the waterway.
Crude is still on pace for a second weekly drop on optimism that the warring parties will manage to conclude at least an interim deal, despite the challenges. Sticking points in the drawn-out negotiations include Iran wanting to retain control over Hormuz and the fate of the nation’s nuclear program.
Adding to challenges, Trump said at a White House meeting he wouldn’t strike a bad deal and insisted the US would not ease sanctions on Iran, at odds with Tehran’s demand for an end to attacks and financial relief. The president also faces pressure from Republican hardliners to continue the war.
“The oil market is very complacent right now,” said Joe DeLaura, global energy strategist at Rabobank, noting that releases from strategic petroleum reserves, as well as sharply lower imports by China, were helping to cushion part of the loss of supply caused by the war.
“By mid-July — if China starts importing again when the SPR releases end — we are in the hockey-stick-upward inflection point for so many refined products,” he said, describing a potential spike in prices.
In the US, an industry group flagged another drawdown in oil stockpiles. The American Petroleum Institute reported that nationwide crude holdings fell 2.8 million barrels last
week, including a decline at the hub in Cushing, Oklahoma. Official data are due later Thursday.
The failure to strike a deal to end the conflict is threatening to prolong the disruption to oil supplies, which has caused a steep jump in bond yields since late February by rekindling inflation. Central banks including the Federal Reserve are expected to eventually raise interest rates in response.
Source: theedgemalaysia