Oil rises as investors remain wary US-Iran ceasefire will open supply flow
Oil prices rose on Thursday amid investor concerns that supply from the key Middle East producing region may not fully resume. Brent crude futures were up $2.6, or 2.74%, at $97.35 a barrel at 0048 GMT, while U.S. West Texas Intermediate (WTI) crude rose $3.02, or 3.2%, to $97.43 a barrel.
Both benchmark prices fell below $100 per barrel in the previous trading session. WTI recorded its biggest decline since April 2020 on expectations that the ceasefire ending the fighting between the U.S. and Israel against Iran would reopen the Strait of Hormuz. The waterway typically carries about 20% of oil supply. Israel continued to attack Lebanon on Wednesday, causing Iran to suggest it would be "unreasonable" to proceed with talks to forge a permanent peace deal. Shippers on Wednesday said they needed more clarity on the terms of the ceasefire before resuming transit through the Strait of Hormuz.
Analysts at Standard Chartered said, "Transit through the Strait of Hormuz is not suddenly risk-free. It remains at Iran's discretion." They also said, "Logistic disconnects, security fears, elevated insurance premiums and operational constraints mean that very little additional energy is likely to be supplied via the Strait of Hormuz in the next two weeks." An oil industry source said Iran struck sites in nearby countries after the ceasefire, including a pipeline in Saudi Arabia that has been used to bypass the blockaded Strait of Hormuz. Kuwait, Bahrain and the UAE also reported missile and drone strikes. **Haitong Futures
Quick Summary
Oil prices are volatile as investors watch the U.S. and Iran - along with other nations in the Middle East. A key agreement is hoped to open up supply, but doubts persist about whether the situation will truly de-escalate.
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