Oil Swings on Fading Optimism for Resolution on Iran Conflict – Yahoo Finance
(Bloomberg) — Oil prices whipsawed Thursday on renewed doubts about a deal to end the US war with Iran and reopen the vital Strait of Hormuz.
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Brent, the global benchmark, closed above $100 a barrel amid signs that both countries are still locking horns over control of the crucial oil and natural gas transit route. West Texas Intermediate futures settled below $95 a barrel.
After markets for the two futures contracts settled, prices moved higher on reports that the US conducted strikes in the vicinity of the strait.
Trading has been volatile this week with investors parsing each detail over whether a deal with Iran could be reached. A fifth of the world’s oil and liquefied natural gas flowed through Hormuz before the war brought traffic almost to a standstill, and its reopening is critical to resolving massive supply disruptions that currently grip global energy markets.
The US is still waiting on Iran to respond to its proposal to reopen the strait and end a war that’s killed thousands of people. Iran’s leaders have yet to indicate whether they’ll accept the terms.
The US is also looking to restart an operation guiding commercial ships through Hormuz that it had initially paused amid pushback from allies, the Wall Street Journal reported. Violence erupted shortly after the US announced the effort earlier this week, with the US and Iran trading fire while Tehran launched attacks on the United Arab Emirates.
News this week indicates that “Iran is not willing to bend over backwards for the Americans,” said Robert Yawger, director of the energy futures division at Mizuho Securities USA.
On Wednesday, Brent tumbled nearly 8% amid renewed hope that the conflict might soon come to an end. But traders are now assessing potential hurdles to reaching a deal, including news that Iran has laid out an updated process for ships seeking to transit Hormuz.
Brent is up about 40% since the start of the war, which has been dubbed the biggest disruption to oil supplies in history.
The strait has been largely closed since the end of February, when the US and Israel launched attacks on Iran. At present, the chokepoint faces a double blockade, with Tehran obstructing traffic, while the US Navy prevents vessels calling at or leaving Iranian ports to squeeze the nation’s oil industry. Shipowners remain cautious, with the strait still virtually empty.
