Oil prices fell slightly today as investors gauged the impact of a US-Iran peace deal, while uncertainty over full resumption of shipping through the Strait of Hormuz limited price declines. Both benchmarks were down about 0.2% early this morning, with Brent crude futures dipping 15 cents to $78.81 a barrel and US West Texas Intermediate falling 12 cents to $75.93 a barrel. Both had fallen about 5% yesterday for a second session in a row to hit three-month lows, fuelled by hopes that a US-Iran deal would allow oil flows through the Strait. "Markets are broadly stripping out the embedded geopolitical risk premium in oil prices," said Priyanka Sachdeva, senior market analyst at Phillip Nova. "That said, the path toward normalisation remains far from straightforward. While political agreements may be progressing, physical tanker traffic through the Strait has yet to fully recover," the analyst added. The deal would provide for the US to lift its blockade of Iran's ports, while Tehran would allow oil tanker traffic through the Strait, effectively blocked since US and Israel strikes on February 28. "Oil markets retreated on expectations the Strait of Hormuz would reopen following the peace agreement, but traders held off further selling pending details," said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment. WTI is likely to stay volatile in a range of $10 above or below $80 a barrel, he added. Before the closure, about a fifth of global crude oil and liquefied natural gas supplies flowed through the Strait. Details of the interim peace deal began to emerge yesterday, with President Donald Trump saying it would rule out a nuclear weapon for Tehran and a US official saying it would allow Iran to sell oil upon signing. The memorandum of understanding, not yet public, extends by another 60 days a tenuous ceasefire agreed in April, so as to allow room for talks toward a permanent truce. Still, industry officials say a full return to pre-war production and refining levels is likely to take weeks, months or even years. Israel has distanced itself from both the April ceasefire and the latest US-Iran pact, fuelling uncertainty about whether it will hold. Israeli drone strikes targeted three vehicles in southern Lebanon yesterday, killing at least four and wounding others, Lebanon's National News Agency said, prompting a rare public rebuke from Trump. China's crude oil throughput fell 9.1% in May on the year to its lowest in almost four years, data showed, also signalling that refiners were starting to draw on stockpiles amid the Iran war. The American Petroleum Institute report showed US crude stocks fell 8.3 million barrels in the week ended June 12, the sources said. It exceeded expectations for a draw of 4.6 million barrels, with official numbers due from the Energy Information Administration later today.
Oil prices fell slightly today as investors gauged the impact of a US-Iran peace deal, while uncertainty over full resumption of shipping through the Strait of Hormuz limited price declines. Both benchmarks were down about 0.2% early this morning, with Brent crude futures dipping…
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A tanker identified as the Kaifan was struck by an unknown projectile northeast of Oman’s Limah in the Strait of Hormuz, according to a July 21 report from UK Maritime Trade Operations. No ships were observed transiting the strait that day. Attribution of the strike and links to prior incidents have not been confirmed by the vessel’s owner.
Goldman Sachs has projected Brent crude averaging $80 per barrel in the fourth quarter and $75 in the following year, conditional on reduced Middle East tensions, while noting upside risks from potential shipping disruptions in the Strait of Hormuz or Red Sea.
Brent prices rose above $91 per barrel amid recent U.S.-Iran exchanges and Houthi threats to Saudi shipments before edging lower on Tuesday. A senior Iranian official told Reuters that mediators had proposed a 10-day ceasefire to preserve an interim agreement.
US forces struck the tanker Settebello in the Gulf of Oman on June 10, killing three Indian crew members when munitions hit the engine room and adjacent areas. Maritime tracking data indicate the vessel had transported Iranian oil under US sanctions for several years and conducted offshore transfers prior to the strike.
The US military described the action as a precision operation, while reports note the ship was stationary at the time.
Iranian officials reported strikes on US radar and air defense sites in Kuwait and Bahrain, along with the interception of two oil tankers in the Strait of Hormuz. The United States conducted strikes on Iranian targets following the deaths of three US soldiers, with the Pentagon stating the actions aimed to degrade capabilities affecting shipping.
Houthi forces in Yemen announced plans to blockade Saudi ports, while both US and Iranian leaders issued statements on further escalation.