Crude oil prices ended the second quarter of the year with the steepest decline since 2020, with Brent shedding close to 40% on optimism about a peace deal between the United States and Iran. But it may be too early to celebrate, ING commodity strategists said today.
Traffic in the Strait of Hormuz is still far from pre-war levels, Warren Patterson and Ewa Manthey wrote, adding that “Total tanker crossings, which include both inbound and outbound movements, are estimated at around 11 on Tuesday, down from a peak of 24 last Wednesday.”
Interestingly, Morgan Stanley earlier in the week said it had counted 35 tanker crossings of Hormuz, including oil and gas carriers, which was the first time the daily total had topped 30 since the start of the war, Bloomberg reported.
Brent crude is now trading at $73.17 per barrel, and West Texas Intermediate is trading at $69.71 per barrel, as of the time of writing. According to ING’s Patterson, these latest price trends suggest traders are pricing zero geopolitical risk into oil benchmarks. In the physical world, however, geopolitical risks remain very much present.
On Tuesday, Iranian officials said they would not meet with U.S. envoys Jared Kushner and Steve Witkoff in Doha to discuss any peace deal. According to a Reuters report, the officials said the two sides first had to sort out the details of their ceasefire agreement, inked earlier this month, before they moved on to other topics, such as Iran’s potential nuclear weapons program.
“No meeting at any level with the American side has been scheduled for the coming days,” Iranian foreign ministry spokesman Esmaeil Baghaei said. The Wall Street Journal, meanwhile, reported President Trump was considering a return to all-out war as an alternative to peace talks. The report suggests that the assumption of a linear process of tanker traffic recovery is quite premature.
By Irina Slav for Oilprice.com
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