In a market analysis sent to Rigzone on Tuesday, Samer Hasn, a Senior Market Analyst at XS.com, flagged conflicting statements regarding negotiations between the U.S. and Iran.
“We hear and read conflicting statements and headlines around the clock regarding negotiations between the United States and Iran to end this war,” Hasn said in the analysis.
“So far there is no real breakthrough to speak of, and we only see attempts by Donald Trump to spread optimism about progress in the negotiations, perhaps with the aim of forcing oil prices down to limit the political cost of this crisis,” he added.
“This comes at a time when fundamental obstacles persist, preventing any progress. Iran does not want to make concessions regarding its nuclear program, wants the immediate release of its frozen funds and assets, and insists on a comprehensive ceasefire that includes Lebanon,” he continued.
“On the other hand, the United States views these demands as unacceptable and believes that meeting them would constitute a defeat in the war,” he went on to state.
Hasn also noted that the Russia-Ukraine war adds more complexity to the “global supply crisis” and warned that “several reports last May indicated that many countries would see their inventories fall to critically low levels, and that the prolonged [Russia-Ukraine] war would push us to the minimum operational threshold for oil storage infrastructure”.
The analyst highlighted that oil markets are trading lower today but pointed out that the commodity “keep[s] holding higher as market pessimism grows over the prospect of a firm ceasefire agreement on any front in the war in the Middle East, which ultimately keeps widespread disruptions to global oil supplies in place”.
“Meanwhile, the failure to achieve a diplomatic breakthrough comes at a time when global oil inventories are critically low and dangerous, on the eve of the summer travel season and high demand,” he added.
Hasn revealed that he believes that oil prices “may remain high for a long time and could hold steady again at levels above $100 per barrel for both West Texas Intermediate and Brent”.
He also outlined in the analysis that, this week, XS.com is “watching for a batch of labor market numbers from the United States”.
“If the job market shows unexpected resilience, the impact of the summer travel season on oil prices could be even greater,” he said.
“This is because demand could show real resilience despite current high levels, potentially driving prices even higher,” he added.
In a market comment sent to Rigzone today, Naeem Aslam, CIO at Zaye Capital Markets (ZCM), highlighted that ZCM sees oil moving between two competing forces, “supply risk premium and demand pressure caution”.
“Prices held near recent gains because uncertainty around U.S.-Iran negotiations, Strait of Hormuz shipping risk, and Middle East supply routes continues to keep traders defensive, while any sign of talks progressing can quickly reduce the fear premium and trigger pullbacks,” he pointed out.
“President Trump’s comments are directly shaping oil sentiment because the market is trying to understand whether the Iran situation is moving toward de-escalation or prolonged disruption,” he added.
“His remarks about talks continuing, going silent, maintaining the blockade, and waiting as long as needed keep crude supported because they do not give traders a clean resolution,” he continued.
In a BMI report sent to Rigzone on Tuesday Morning by the Fitch Group, analyst at BMI, a unit of Fitch Solutions, noted that the U.S.-Iran war “has wrought wide-ranging disruptions to the Middle East oil and gas sector, collapsing exports and shuttering production”.
“Repeated attacks on infrastructure have caused significant damage, raising multi billion dollar liabilities and extending post conflict recovery horizons,” the BMI analysts warned.
Rigzone has contacted the White House and the Iranian Ministry of Foreign Affairs for comment on Hasn and Aslam’s statements and the BMI report. At the time of writing, neither have responded to Rigzone.
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