Oil Prices Decline as US-Iran Extend Ceasefire
Oil prices declined as the global commodity market reacted to a tentative 60-day ceasefire extension between the United States and Iran, pending President Trump’s approval, easing oil price pressures and broadly supporting emerging-market currencies.
International benchmark Brent crude traded at $91.41 per barrel, down around 1.39% from the previous close of $ 92.70. US benchmark West Texas Intermediate (WTI) decreased about 1.67% to $87.23 per barrel, compared with $88.9 in the previous session.
Experts stated that expectations of an end to the conflict and a mutual agreement dominate the market, noting that crude oil prices could retreat toward the $80 levels if this perception persists.
While high volatility has been observed in oil prices recently, signals that the three-month-old operations by the US and Israel against Iran could end, coupled with expectations that the Strait of Hormuz will reopen, limited the upward pressure on oil prices.
Although it is noted that maritime traffic in the Strait, through which nearly one-fifth of the world’s oil supply and a significant portion of LNG procurement pass, remains well below pre-war levels, experts pointed out that the normalisation of shipping traffic in the Strait could provide some short-term relief to the oil market, though uncertainties regarding the speed and permanence of the recovery persist.
Meanwhile, the US Energy Information Administration (EIA) announced that the country’s commercial crude oil inventories decreased by approximately 3.3 million barrels last week, falling to 441.7 million barrels.
Market expectations had pointed to a decline of around 2.8 million barrels. Strategic petroleum reserves, which are excluded from commercial inventories, also dropped by nearly 9.1 million barrels to 365.1 million barrels.
During this period, US gasoline inventories fell by about 2.6 million barrels, recorded at 211.6 million barrels. In the same period, US daily crude oil production increased by 13,000 barrels during the week of May 16-22, reaching 13.715 million barrels.
The country’s crude oil imports decreased by 803,000 barrels per day from the previous week to 6.212 million barrels, while crude oil exports decreased by 1.164 million barrels per day to 4.440 million barrels.
Experts emphasised that the US data indicates very strong domestic oil consumption, noting that the rapid depletion of gasoline and oil inventories ahead of the summer season signals that the US is utilising its oil for its domestic market rather than exporting it.
This high consumption in the country is seen as the most critical supporting factor preventing oil prices, which have dropped due to geopolitical agreements, from falling further. FTSE 100 Dips, Wall Street at Record Highs Amidst Ceasefire Extension
