Oil prices weakened again, nearly erasing all the gains made during the US-Iran war. Brent fell to near US$73 per barrel after plunging 4% in the previous session, while West Texas Intermediate (WTI) hovered around US$70 per barrel. This position puts oil prices just a fraction of their pre-war closing levels.
The main pressure comes from signs of a supply glut in the physical market. Oil buyers are now receiving more offers from the Middle East and Africa. This indicates that concerns about supply shortages are easing, especially after ship traffic through the Strait of Hormuz increased again and several tankers were able to openly transit with active satellite signals.
Progress in peace talks between the United States and Iran also weighed on oil prices. Both countries have signaled initial progress toward ending the war, although some claims remain divergent. The market also remains vigilant about further obstacles, including the nuclear issue and a ceasefire in Lebanon, which could determine whether a permanent peace agreement can be reached.
The impact of the supply recovery is visible in the structure of the oil market. The Brent prompt spread, often used to gauge supply tightness or looseness, shifted to a bearish contango structure for the first time since the war began. This means the market is beginning to perceive near-term supply as less tight, so buyers are no longer having to pay high premiums to obtain oil more quickly.
Furthermore, the United States’ temporary waiver on purchases of already-loaded Iranian oil has the potential to increase supply to the global market. However, financing and insurance constraints could still limit Iranian oil sales in the near term. Therefore, despite weakening price sentiment, the market is not yet fully convinced that Iranian supply will return to normal without any problems.
Despite the sharp drop in oil prices, the risk of supply tightness has not completely disappeared. In the United States, oil stocks at Cushing, Oklahoma, fell to around 19 million barrels, below the level considered minimum operational requirements. This means that oil prices are indeed being pressured by the recovery in global supply and the easing risk of war, but low stocks at several key points could still prevent further declines. (asd)*
Source: Newsmsker.id