Oil rebounds on concerns about US-Iran peace deal, restoration of supply
Prices are now more than 30% lower than their peak at the height of the war
Add BT as a preferred source
OIL prices rebounded on Tuesday (Jun 16) on concerns about the lack of details in a preliminary agreement ending the war between the US and Iran and the realisation the resumption of supply through the key Strait of Hormuz may take longer than thought.
Brent crude futures gained US$0.26, or 0.3 per cent, to US$83.42 a barrel and US West Texas Intermediate rose to US$81.12 a barrel, up US$0.46, or 0.3 per cent, as of 0108 GMT.
On Monday, oil prices fell by nearly 5 per cent to their lowest close since Mar 4 after US President Donald Trump said a memorandum of understanding was signed to end the US-Israeli war with Iran, which had closed the Strait of Hormuz that typically carried one-fifth of the world’s oil supply before the conflict and caused about 14 million barrels per day of output to be shut in.
Despite the optimism following the announcement, the full details of the memorandum have not been released publicly and a permanent truce has not been worked out.
Early indications are the agreement would reopen the blockaded Strait of Hormuz and extend a ceasefire for 60 days, allowing negotiators to tackle difficult issues like the future of Iran’s nuclear programme.
On Monday, Iranian President Masoud Pezeshkian said the US-Iran memorandum of understanding was an “important step” toward stopping the fighting but a final agreement for a lasting truce “has yet to take shape.”
“The devil may be in the details, and until those details emerge, the market is likely to show restraint regarding the further unwinding of the risk premium in energy markets,” said Tim Waterer, chief market analyst at KCM Trade.
A senior Iranian official said on Monday pending a final agreement Iran would freeze its nuclear activity, refraining from further uranium enrichment or the expansion of nuclear facilities.
Even with the current agreement, it remains unclear how quickly the curtailed supply will be able to return to the market.
“The path back to normal supply flows remains far from straightforward,” said Tony Sycamore, market analyst at IG.
“Clearing mines, restoring full marine insurance coverage, and getting vessels and operators comfortable enough to return to the Gulf will all take time as will bringing shuttered wells and damaged regional infrastructure back online,” Sycamore added. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
TRENDING NOW
Abandoned ‘Titanic’, failing ‘ancient towns’: Why China’s tourism boom leaves white elephants behind
BlackRock said to be in exclusive due diligence for Capri by Fraser China Square
‘Very low chance’ that US-Iran deal reverts energy flows to South-east Asia through Hormuz: Bloomberg Economics
Tiger Beer lines up new products as Singapore operations’ role shifts from brewing to innovation
