Crude oil prices may have retreated from the highs reached on Thursday, but they are still set for a strong weekly gain.
At the time of writing, Brent crude was trading at 112.10 per barrel, and West Texas Intermediate was trading at 106.30, with the gap between the two benchmarks shrinking once again.
On Thursday, the final day of trading for June futures, Brent crude topped $126 for a brief period, remaining around $125 per barrel over the Thursday trading session. The Benchmark is now up more than 40% since the war broke out in late February.
The latest news about the Middle East war does not spark expectations of a quick reversal in price movements. Media reported on Thursday that President Trump was going to be briefed on the option for more military strikes on Iran, while a senior official from Iran’s Revolutionary Guards Corps warned of “long and painful strikes” against the U.S. in retaliation for its attacks.
What’s more, Iran’s Foreign Ministry spokesman, Esmaeil Baghaei, said Thursday that peace prospects remained distant. “Expecting to reach a result in a short time, regardless of who the mediator is, in my opinion, is not very realistic,” he said in a statement.
Also on Thursday, ING commodity analysts wrote that “The breakdown of talks between the US and Iran, along with President Trump reportedly rejecting Iran’s proposal for a reopening of the Strait of Hormuz, has the market losing hope for any quick resumption in oil flows.”
The team reported that the war and the resulting price surge in crude had resulted in demand destruction of some 1.6 million barrels daily. This, however, is much lower than the estimated supply destruction: according to new data from Vortexa, the net loss stands at 9 million barrels daily. Oil in storage is also in a sharp decline as countries draw on stocks to fill supply gaps.
By Irina Slav for Oilprice.com
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