Status of the Global Oil Issues caused by a US President
Report on Oil coming out of the middle east as Trump and Iran try to find common ground. This is way out of the ordinary and pretty much did not have to occur except for an oversized ego in the western hemisphere trying to make his mark globally. I am sure people will remember this president globally.
OilPrice: “Oil Prices Slide as Traders Bet on Diplomacy, Editorial”
A partial report at AB. The rest can be found at OilPrice.com
July WTI crude oil futures traded sharply lower through Thursday as traders removed much of the geopolitical premium tied to tensions between the United States and Iran. Through June 11, the contract traded between a high of $95.47 and a low of $85.13 before settling near $85.93. At that level, prices were down $4.32, or 4.79%, from last week’s close.
The week’s price action was driven largely by changing expectations surrounding President Trump’s approach toward Iran. Early concerns that the conflict could escalate and threaten Middle East oil supplies helped support crude prices near weekly highs. Later, signs that diplomacy remained possible encouraged traders to reduce positions built around fears of a of a major supply disruption.
Trump Pulls Back from Military Action
The biggest shift in sentiment came after Trump said he had canceled planned military strikes against Iran. The decision signaled that the administration was still leaving room for negotiations rather than moving immediately toward broader military action.
Before that announcement, traders had priced in the possibility that direct U.S. involvement could increase risks to energy infrastructure and tanker traffic in the region. As fears of an immediate escalation eased, crude prices moved lower as traders removed part of the geopolitical risk premium from the market.
Trump also suggested that a peace agreement with Iran remained possible. Those comments reinforced expectations that diplomacy could prevent a more severe disruption to global oil supplies.
Strait of Hormuz Remains a Major Concern
Despite the market’s focus on diplomacy, the Strait of Hormuz continues to represent a major risk for oil markets.
Iran warned vessels against using the waterway, raising concerns about potential disruptions to one of the world’s most important oil shipping routes. At the same time, commercial shipping continued through the strait, helping calm fears that exports would be significantly affected in the near term.
This combination of ongoing risks and uninterrupted oil flows created uncertainty throughout the week. Traders recognized that while the immediate threat appeared lower, the potential for future disruptions remained high.
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It appears there still is a major threat of disruptions. Any reports coming from the Trump administration should not be given 100% credibility. The scenario as taken from OilPrice?
“A sustained move in pricing above $87.91 will signal the presence of buyers. Initially, the move will face headwinds at $91.21 and $95.67. However, $97.00 is the trigger point for a possible acceleration to the upside.”
It does not sound like low prices mean everything is ok with the middle east oil fields and shipping around the straits. By all means, this should not be considered a Trump victory.
Much depends upon how the United States via Trump approaches Iran as to whether inventory and shipping returns to normal. he rest of the article can be found at: “Oil Prices Slide as Traders Bet on Diplomacy.” Oil Price