Crude oil prices reversed their climb this morning, retreating on reports that efforts are being made to negotiate another ceasefire between the United States and Iran.
Brent crude was trading at $88.77 per barrel at the time of writing, down from over $90 per barrel, and West Texas Intermediate was changing hands for $82.31 per barrel despite continued missile strikes in the Persian Gulf and President Trump’s threat to punish Iran for the deaths of several U.S. troops.
Reports about ceasefire efforts focus on negotiating a ten-day ceasefire but chances of that actually happening are slim as neither side appears willing to make concessions. Reuters cited an unnamed senior Iranian official as saying Tehran had received a ceasefire proposal aiming to revive the June deal with the United States but gave no indication of how willing the Iranian leadership was to consider agreeing to it.
Media earlier this week reported that tanker traffic via the Strait of Hormuz is back to almost non-existent as the U.S. and Iran trade missile strikes, and the Yemeni Houthis on Monday threatened to impose a naval blockade on Saudi Arabia which, if successful, would sap Saudi Arabia’s Red Sea oil export route.
ING commodity analysts wrote in a note today that Saudi Arabia has been exporting crude at a rate of 4.6 million barrels daily from the Red Sea port of Yanbu, as of June. That was an increase from 1.3 million barrels daily exported via that route at the start of the year, Warren Patterson and Ewa Manthey wrote.
The analysts also warned that any new Red Sea disruption would redirect ship traffic again, forcing freighters to go around Africa. “If shippers decide to avoid the Bab el-Mandeb Strait, voyage times will be longer and more expensive. Looking at oil price action this morning, the market is not convinced that this blockade will be successful,” the analysts said.
By Irina Slav for Oilprice.com
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