Oil prices edged higher after falling more than 7% the previous day, as reports of a new military attack in Iran renewed uncertainty over the prospects for an interim agreement between Tehran and Washington to open the Strait of Hormuz.
Brent crude rose to near US$98 per barrel, while WTI hovered around US$91. These gains came as the market assessed that supply risks remained high, despite earlier signs that talks were progressing positively.
According to a New York Times report, citing US Central Command (Centcom), US forces attacked a missile launch site and a ship suspected of attempting to plant mines. Iran’s semi-official Fars News Agency also reported loud explosions heard around the strait near the coastal cities of Sirik and Jask.
Earlier in the week, oil prices fell sharply after US President Donald Trump wrote that talks were “going well,” while still threatening further attacks if negotiations failed. At the same time, statements that a deal was imminent contributed to the downward pressure on risk premiums in the previous session.
Despite rallying in March and April, oil prices are still trending lower throughout May, as a fragile ceasefire and calls for the reopening of Hormuz outweighed signals of dwindling supplies. The Strait of Hormuz, a strategic waterway that normally carries about a fifth of global oil and LNG trade, remains closed and under blockade by the US and Iran.
Several analysts believe it is premature to assume an agreement will be reached and adhered to. The market is also monitoring other potential bottlenecks, including disagreements over who should manage maritime traffic at the chokepoint, as well as escalation in Lebanon after Israel announced it would intensify its attacks on Hezbollah.
In recent trading, Brent July crude rose 1.6% to US$97.71 at 8:13 a.m. in Singapore, while WTI July crude was at US$91.39. There was no price settlement on Monday due to a US holiday, so today’s movements largely reflect risk adjustments and geopolitical headline developments. (asd)*
Source: Newsmaker.id