Crude oil prices started the week with a jump after President Trump rejected a peace deal proposal tabled by Iran last week at the UN General Assembly.
At the time of writing, Brent crude was trading at $107.24 per barrel, with West Texas Intermediate at $94.10 per barrel, the latter pressured by news that the U.S. federal government may institute a temporary ban on diesel, which would force refiners to cut run rates, boosting the availability of crude oil.
Interestingly, a fresh report about improving oil flows out of the Persian Gulf failed to offset fears of continued war in the region. Normally, such news would pressure oil prices immediately and keep them pressured, as evidenced by developments since March. This time, it seems war-related concerns are taking the upper hand.
These concerns are well justified. The Wall Street Journal reported this weekend that president Trump was considering a resumption in military strikes on Iran once the November midterms are over, strengthening the prospect of a prolonged war. This would in turn prolong the disruption on normal oil trade.
The U.S. and Iran appear to be stuck on their mutual conditions for peace. Iran has conditioned its agreement to a deal—and the reopening of Hormuz—on the U.S. lifting its naval blockade and oil sanctions, and unfreezing Iranian funds. The U.S., on the other hand, appears to believe economic pressure would eventually break Iran and has rejected the idea of lifting either the naval blockade or the earlier sanctions.
What seems to be infusing the situation with additional uncertainty is President Trump’s tendency to change his approach to Iran, often radically. Earlier this month, he said he expected the war to be over right after the November midterms. Later, he was reported to have warned he would restart strikes against Iran. According to unnamed government officials cited by the Wall Street Journal, the outcome of the midterms will also affect the U.S. president’s views of and decisions on the war.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com
- Netherlands Pushes to Scrap EU Gas Storage Mandate After $1.14 Billion Bill
- Ukraine Drone Strike Knocks Out Russia’s Novoshakhtinsk Refinery
- Why Record Heat Failed to Lift U.S. Natural Gas Prices
