Heat on the Washington-Tehran line
The exchange of fire between Israel and Iran on Monday once again stoked uncertainty in the market, which had been awaiting a breakthrough in peace negotiations aimed at ending hostilities in the Middle East.
“Iran launched a new wave of attacks just a few hours after launching ballistic missiles toward Israel on Sunday. Israel responded with attacks on military targets in western and central Iran, while Iranian state media reported numerous explosions in the capital, Tehran,” reports Bloomberg.
According to available information, Israel also struck the Iranian petrochemical company Karun near the city of Bandar-e Mahszahr.
As Donald Trump stated in a Sunday interview with Fox News, the renewed escalation of the conflict would hinder the possibility of a peace agreement that could provide another 60 days of truce.
The above events lifted Brent and WTI oil prices at the start of the week by almost 5%, which still fluctuate but remain below $100 per barrel.
Investor concerns are also raised by the prolonged blockade of the Strait of Hormuz, which, according to many experts, was expected to drive fuel prices up to $200 per barrel.
The supply shock, Bloomberg reports, was partially "diluted" by a combination of global stabilizing mechanisms.
“The combination of record U.S. exports, a sharp and unexpected drop in demand in China, and a steady flow of oil that continues to pass through the strait helped mitigate most of the effects of losing more than 10 million barrels per day from the Middle East. The surplus before the war also softened this blow,” the agency said.
CNBC, citing an Iranian official involved in talks between Tehran and Washington, reports that a ceasefire between the countries is becoming increasingly unlikely.
“An agreement with President Trump is no longer on the table at this stage,” he said.
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Brent and WTI oil prices on Monday, June 8
The futures contract price for Brent oil on Monday, June 8 is at 97,5 USD per barrel (+4.75%).
Chart. Futures contract price for Brent oil
Source: Trading Economics.
The futures contract price for WTI oil reaches 94,6 USD per barrel (+4.58%).
Chart. Futures contract price for WTI (West Texas Intermediate)
Source: Trading Economics.
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Source: Bloomberg.
