Brent declines as optimism over US-Iran ceasefire grows
The front-month ICE Brent contract has fallen by $2.90/bbl on the day, to trade at $93.51/bbl at 09.00 GMT.
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Upward pressure:
Concerns over whether the ceasefire between the US and Iran will hold, following fresh US military strikes, have limited Brent’s decline.
“Crude oil prices rallied early in the session amid renewed skirmishes in the Middle East,” said ANZ Bank senior commodity strategist Daniel Hynes.
A closure of the Strait of Hormuz and escalating geopolitical tensions in the Middle East could push Brent prices as high as $200/bbl by the end of 2026, analysts at energy firm Wood Mackenzie estimate.
“Oil prices could reach US$200/bbl [by end of 2026] in a worst-case scenario, as more than 11 million b/d of Gulf crude and condensate supply remains curtailed,” the Wood Mackenzie report said.
Meanwhile, commercial US crude oil inventories fell by 3.3 million bbls to 441.7 million bbls in the week ending 22 May, according to the US Energy Information Administration’s (EIA) weekly oil inventory report, adding some upward pressure to prices.
Downward pressure:
Reports that the US and Iran have reached an agreement on a potential ceasefire extension have added downward pressure on oil prices.
The US and Iran agreed on Thursday to extend the ceasefire and lift restrictions on shipping through the Strait of Hormuz, according to Reuters citing sources.
“Washington nearing deal to extend Iran ceasefire, reopen Hormuz,” remarked VANDA Insights founder Vandana Hari.
“The oil market continues to edge lower amid growing optimism that the US and Iran are moving toward a deal,” two analysts from ING Bank said.
By Tuhin Roy
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