Brent plunges as Middle East de-escalation hopes weigh on market
The front-month ICE Brent contract has fallen by $5.77/bbl on the day, to trade at $80.30/bbl at 09.00 GMT.
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Upward pressure:
Brent’s price has managed to trade above $80/bbl as vessel traffic in the Strait of Hormuz continues to remain well below pre-war levels.
Only 15 ships transited the Hormuz chokepoint yesterday, maritime intelligence firm Windward reported, highlighting the lingering hesitation among shipowners as regional maritime risks persists.
“The global oil market remains under significant strain as disruptions to Middle East supply and trade flows continue to tighten market fundamentals,” ANZ Bank’s senior commodity strategist Daniel Hynes said.
Meanwhile, another commercial tanker came under attack earlier this week, after being hit by an unknown projectile about 20 nautical miles northeast of Al Khasab, Oman, the United Kingdom Maritime Trade Operations (UKMTO) agency reported.
“Persian Gulf exports remain constrained by attacks on vessels and limited transits through the Strait of Hormuz, while production losses across the region continue to weigh on global supply,” Hynes added.
Downward pressure:
Brent crude’s price has fallen by more than $5/bbl over the past day as hopes for a US-Iran peace deal grow.
US treasury secretary Scott Bessent said in an interview with CNBC that a deal could be signed as early as today, while secretary of state Marco Rubio said talks with Iran and Oman have made substantial progress.
“The renewed weakness in the [oil] market comes amid growing signs of the US and Iran moving closer to a potential short-term deal, which would see the Strait of Hormuz reopen,” two analysts from ING Bank noted.
Tehran is also considering allowing European countries to clear mines from the Strait of Hormuz – a vital maritime chokepoint that accounted for roughly 20% of global seaborne oil shipments prior to the conflict, according to a Bloomberg report.
“This is a notable softening of its previous stance that no foreign countries could join the de-mining efforts,” Hynes said.
By Aparupa Mazumder
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