Oil Prices Dip Amidst Uncertainties in US-Iran Agreement
Oil prices fell as uncertainties surrounding negotiations between Iran and the US, and rising tensions, weakened expectations for the reopening of the Strait of Hormuz.
International benchmark Brent crude traded at $94.94 per barrel at 09.50 a.m. local time (0650 GMT), down around 1.76% from the previous close of $96.67.
US benchmark West Texas Intermediate (WTI) decreased about 2.38% to $91.70 per barrel, compared with $93.89 in the previous session.
Prices had risen 4% on Tuesday after expectations for a possible agreement between Washington and Tehran to end the conflict weakened following new US attacks on Iran over the weekend.
Iran claimed that the US violated the ceasefire by carrying out attacks on targets around the Strait of Hormuz, while Washington stated that the strikes were defensive in nature.
Despite increasing hopes for a possible agreement between the US and Iran, market sentiment remains mixed as US attacks on Iran have resumed.
Following a ceasefire reached in April after 3 months of conflict, both sides had indicated progress in talks aimed at reopening the Strait of Hormuz, a critical route for global oil and natural gas flows. However, experts said that escalating tensions could put this process at risk.
US growth data and personal consumption expenditures (PCE) figures, closely monitored by the US Federal Reserve (Fed) as a key inflation indicator, are due later this week and are expected to play a decisive role in shaping market direction.
Meanwhile, expectations that interest rates may remain elevated for a longer period under the leadership of the Fed’s new chairman, Kevin Warsh, continue to sustain risk concerns in equity markets.
While US growth and inflation data remain key drivers of oil price movements, expectations that the Fed will maintain higher interest rates for an extended period are heightening concerns about the demand outlook, putting downward pressure on prices.
Meanwhile, recent reports that several LNG tankers have passed through the Strait have strengthened expectations that the waterway could resume operations in the near term, potentially supporting global supply. Rand Steadies Against USD, EUR, GBP on Easing Oil
