Tension between the US and Iran prevents a radical reduction in oil prices
12 June 09:03
On the morning of Thursday, June 12, world oil prices declined slightly after the growth recorded earlier, but the situation in the Middle East does not allow us to expect a large decline in oil prices in the near future. This was reported by "Komersant Ukrainian" with reference to Reuters.
According to OilPrice.com, futures for Brent crude oil lost 28 cents (0.4%) and were trading at $69.49 per barrel as of 08:38 Kyiv time. US WTI fell 23 cents (0.34%) to $67.92 per barrel.
The day before, both benchmark oil grades rose by more than 4%, reaching their highest levels since early April.
US decisions and tensions in the Middle East
US President Donald Trump said that Washington has decided to move personnel in the Middle East region due to growing threats.
“The Middle East can be a dangerous place,”
– Trump said, adding that the United States will not allow Iran to acquire nuclear weapons. At the same time, Tehran insists that its nuclear program is peaceful.
On Sunday, the United States and Iran are scheduled to holdtalks on Tehran’s nuclear activities. This dialogue is causing serious concern in the oil market because of the potential risk of destabilizing supplies.
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Trump has repeatedly stated that if the agreement fails, the United States could strike Iran. In response, Iranian Defense Minister Aziz Nasirzadeh said on June 11 that Tehran was ready to attack US bases in the region if the talks failed and the US provoked a conflict.
On Sunday, US Special Representative Steve Witkoff is expected to meet with Iranian Foreign Minister Abbas Araghchi in Oman to discuss Iran’s response to the US proposal for a nuclear deal.
At the same time, ANZ analysts noted in their research that hopes for a successful deal are fading as Trump said he has less and less confidence in his ability to convince Iran to stop nuclear activity.
According to Reuters, citing sources in the US and Iraqi governments, Washington is preparing to partially evacuate the US Embassy in Iraq. Families of US military personnel are also allowed to leave the region, including Bahrain.
As a reminder, Iraq is the second largest oil producer among OPEC member countries after Saudi Arabia. Any escalation in the region could significantly affect the supply of the product.
Analysts’ comments
According to Vivek Dhar, director of energy commodities research at Commonwealth Bank Australia, some of the recent rise in oil prices was “exaggerated” because the US has not identified a specific threat from Iran.
“Lower prices are a logical step, but the geopolitical premium that keeps Brent above $65 will remain until there is more clarity on the US-Iran negotiations,”
– Dhar said.
Calvin Wong, senior analyst at OANDA, believes that oil prices have weakened after reaching key technical resistance levels the day before. Some market players are also expecting a reduction in tension after Sunday’s meeting.
Oil reserves in the United States
The U.S. Energy Information Administration (EIA) reported that crude oil inventories in the country last week fell by 3.6 million barrels to 432.4 million barrels. This is significantly more than analysts polled by Reuters had predicted, who expected a decline of only 2 million barrels.
Summary
The global oil market remains vulnerable to geopolitical risks. Expectations of negotiations between the US and Iran, rising tensions in the region, and the movement of the US military are creating unstable price dynamics. Despite a short-term decline in quotations, the market continues to price in the so-called “geopolitical premium” that is unlikely to disappear until the future of Iran’s nuclear program is clear.
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