Oil prices show mixed dynamics amid supply uncertainty
Kyiv • UNN
Brent futures rose to $95.19, while WTI fell to $91.05. The market awaits US-Iran talks amid limited fuel supplies.
Oil prices showed mixed dynamics on Wednesday: Brent crude futures rose, while WTI crude futures fell amid uncertainty over oil supplies from the key producing region in the Middle East, as the Strait of Hormuz remains largely closed, UNN reports with reference to Reuters.
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Brent crude futures rose 40 cents, or 0.4%, to $95.19 a barrel by 04:20 GMT (07:20 Kyiv time), paring earlier losses of 0.9% after falling 4.6% in the previous session. U.S. West Texas Intermediate crude fell 23 cents, or 0.3%, to $91.05. Earlier, the contract fell 4.7% after a 7.9% drop in the previous session.
Talks to end the war between the US and Israel, and Iran, could resume in Pakistan within the next two days, US President Donald Trump said on Tuesday after the failure of weekend talks prompted Washington to impose a blockade on Iranian ports. This boosted optimism about the possibility of resolving the conflict and restoring oil and fuel supplies.
While the market believes the worst is over and is pricing in further rounds of US-Iran peace talks in the coming days, there is currently more hope than actual events, said Suvro Sarkar, head of the energy sector group at DBS Bank.
"Physical oil is still trading at a significant premium to these futures prices," he said.
The war has effectively closed the Strait of Hormuz, a key waterway for oil and petroleum product supplies from the Persian Gulf to buyers worldwide, especially in Asia and Europe.
Refiners are desperately seeking alternative sources of crude, driving up prices for oil from regions such as the U.S. Gulf Coast and the North Sea. On Tuesday, a cargo of WTI Midland crude for delivery to Rotterdam traded at a record premium of $22.80 a barrel compared to European benchmark prices.
Despite a two-week truce, transit through the strait remains uncertain, with traffic at only a fraction of the approximately 130 vessels that used the waterway before the war, sources said on Tuesday.
A U.S. destroyer on Tuesday stopped two oil tankers attempting to leave Iran, a U.S. official said.
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"While diplomatic headlines suggest the possibility of renewed US-Iran talks and even a temporary easing of transit restrictions, the physical reality remains fragmented," the Schork Group said in a note.
The market may lose some access to additional supplies after two U.S. administration officials told Reuters on Tuesday that the U.S. would not extend a 30-day waiver from sanctions on Iranian oil at sea, which expires this week, and would quietly allow a similar waiver from sanctions on Russian oil to expire over the weekend.
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Later today, markets will monitor official U.S. oil inventory data. U.S. crude inventories are expected to have risen slightly last week, while distillate and gasoline inventories are likely to have fallen, a Reuters poll showed. Market sources familiar with American Petroleum Institute data said on Tuesday that U.S. crude inventories rose for a third consecutive week.