Uncertain Middle East situation pushes oil to a discount
Oil prices fell at the start of the week amid a fragile ceasefire between the United States and Iran.
Donald Trump warned that military actions could resume if Tehran does not accept the peace terms presented by the White House.
The Republican recently stated that he was considering a “mass attack” on Iran, but ultimately withdrew from that plan.
We wrote more about this in the article: Dollar rate carries risk! Experts warn. Trump is preparing another strike on Iran, Axios claims.
According to CNN, the Iranian Ministry of Foreign Affairs denies reports of ongoing peace talks, stating that no negotiations are currently taking place with the United States.
Donald Trump will meet separately today with Ukrainian President Volodymyr Zelensky and Israeli Prime Minister Benjamin Netanyahu.
In the coming days, talks between representatives of Israel and Lebanon will also take place in Rome.
The ongoing discount in the oil market, according to ING Think analysts, fits a recurring pattern observed since the conflict began, leading to alternating rises and falls in crude prices.
“We have been in such a situation many times, so the market may slightly outpace reality. After all, there has been no improvement in tanker flows through the Strait of Hormuz,” they said.
“If this decline persists, we will need to see a revival of flow through the strait. Moreover, even if an agreement is reached, the market would still need to factor in a significant risk premium, given that recent events have shown how quickly an agreement can unravel,” they added.
The report indicates that risk factors also include concerns about ship movements through the Bab el-Mandeb Strait, which pose a threat to Saudi oil exports from the Red Sea.
“Although tanker traffic through the Bab el-Mandeb Strait slowed due to the risk of an attack by Houthi forces in Yemen, it was not completely halted,” we read.
“However, for the Houthi, the risk is not limited to Saudi transport but also concerns Saudi oil infrastructure, which became a target of attacks over the weekend. It is still unclear what impact, if any, this may have on Saudi oil supplies,” added the report.
Also read: Fuel prices fell thanks to Trump. Attack on Iran canceled! “I was asked”
See also: Fuel prices plunged after Trump’s remarks. Attacks on Iran were halted. “I instructed the Department of Defense”
Brent and WTI prices on Tuesday, July 28
The futures price for Brent oil on Tuesday, July 28 is at 85,2 USD per barrel (-3.1%).
On Monday, the market closed the session down 1.87%.
Also: Will higher oil hit Polish wallets? A well-known bank predicts a sharp fuel price spike
Chart. Futures price for Brent oil
Source: Trading Economics.
The futures price for WTI oil reaches 80,4 USD per barrel (-2.1%), after a drop of about 5.16% the day before.
Chart. Futures price for WTI oil (West Texas Intermediate)
Source: Trading Economics.
Also: Impsa in the Middle East hits fuel prices. A drop to 40 USD per barrel soon?
See also: Fuel prices in Poland will rise, shortages may appear at stations? Expert: “It will not be a one-time sharp move affecting drivers”
Sources: CNN, ING Think.
