Crude tops $100 again as US-Iran talks remain uncertain
What's the story
Oil prices have rebounded after a two-day losing streak, recovering from a 10% fall in the previous session. The recovery comes as investors consider new developments in the Middle East and renewed fears of tensions between Iran and the United States. Brent crude futures for July rose by 0.91% to $102.19 per barrel, while West Texas Intermediate futures for June gained by 1.23% to $96.25 per barrel on Thursday.
Diplomatic tension
Diplomatic tension between US and Iran influences oil prices
The fluctuating oil prices are being influenced by the diplomatic tension between Iran and the US. While some reports indicate that Washington and Tehran are close to a potential peace deal, President Donald Trump has taken a more aggressive stance. He threatened on Wednesday that if Iran does not accept a peace deal, it would face intensified bombing.
Military campaign
Operation Epic Fury and naval blockade
Trump also spoke about Operation Epic Fury, the US military campaign against Iran. He said it would end if Iran accepted the terms being discussed but warned that this was not guaranteed. If an agreement is reached, he said, the US naval blockade of Iranian ports in the Gulf of Oman would be lifted and "allow the Hormuz Strait to be OPEN TO ALL, including Iran."
Peace proposal
US expects Iranian response on proposal within 48 hours
The Axios report revealed that the US and Iran are close to a one-page, 14-point memorandum of understanding. The draft reportedly outlines a ceasefire and lays the groundwork for future negotiations. The US is expecting Iran's response on several key issues within 48 hours. Iranian Foreign Ministry spokesperson Esmaeil Baqaei said Tehran is still reviewing the proposal and will respond through mediators in Pakistan.
Price forecast
Risks remain high in the market
Market analysts have warned that risks remain high. Haitong Futures has warned that the current ceasefire could be short-lived, with stalled US-Iran talks possibly leading to renewed escalation and higher oil prices. Nuvama Institutional Equities has also warned that if the Strait of Hormuz remains blocked for a long time, it could disrupt some 20 million barrels per day of crude flows, potentially pushing oil prices into the $110-$150 per barrel range.