After shedding 7% yesterday, crude oil prices inched up earlier today following a Wall Street Journal report about a U.S. strike on Iran’s Qeshm Island.
Brent crude traded at $105.26 per barrel at the time of writing, and West Texas Intermediate traded at $97.07 per barrel, after the WSJ cited unnamed U.S. officials as saying Iran’s Qeshm Island became a target in what they said was the latest in a series of “ limited strikes Washington has secretly carried out” over the past few weeks on Iran.
The report counters earlier media coverage about continued diplomatic efforts to end the war that has caused the most severe disruption in global oil and gas supply in history. It also goes against coverage indicating President Trump was not determined to resume strikes on Iran.
“We had a war with Iran. We won,” Trump told media on Monday, as quoted by the Wall Street Journal. “I don’t know if you even call it a war because we haven’t been doing any fighting for months.”
“The report added a degree of risk premium back into the oil price. Just when markets were starting to price in a more diplomatic path, this reminder of ongoing military activity has flipped the tone,” Reuters quoted KCM Trade analyst Tim Waterer as saying earlier today.
Indeed, hopes about a diplomatic solution to the conflict drove oil prices lower at the start of the week, as traders ignored Iran statements that all seven of its conditions would need to be met in order for a peace deal to be agreed, focusing instead on the very fact of talks being held—between Iranian and Qatari officials.
Some believe the war premium is already factored into prices and any future rally would only take place if physical oil supply gets disrupted additionally. “Unless there is concrete evidence of further disruption to physical supplies or critical energy infrastructure, fresh headlines alone may struggle to sustain another rally,” Phillip Nova’s Priyanka Sachdeva said, as quoted by Reuters.
By Irina Slav for Oilprice.com
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