The oil market edged lower on Tuesday but remained well above $100 per barrel, as investors weighed mixed signals from President Donald Trump on the resumption of military strikes against Iran.
Brent crude futures lost 0.73 per cent to trade at $111.28 per barrel, and the US West Texas Intermediate (WTI) fell 0.82 per cent to sell for $107.77 per barrel.
President Trump told reporters Tuesday that the US. might have to give Iran “another big hit” after he had previously posted that his administration would ‘hold off’ on a planned military attack, renewing the threat after he said he called off the attack scheduled for Tuesday at the request of the leaders of Qatar, Saudi Arabia and the United Arab Emirates (UAE).
The American President also said that Iran has a “limited period of time” to agree to a deal, giving options “two or three days, maybe Friday, Saturday, Sunday, something, maybe early next week.”
Iran’s latest peace proposal to the US involves ending hostilities on all fronts, including Lebanon, the exit of US forces from areas close to Iran and reparations for destruction caused by the war.
Meanwhile, the US imposed sanctions on an Iranian foreign currency exchange house and what it said were front companies overseeing transactions on behalf of Iranian banks. It also blocked 19 vessels, which it said were involved in shipping Iranian petroleum and petrochemicals to foreign customers. It also seized an oil tanker linked to Iran in the Indian Ocean overnight.
US Treasury Secretary Scott Bessent extended a sanctions waiver by 30 days to allow “energy-vulnerable” countries to continue purchasing Russian seaborne oil.
Oil markets continue to price in persistent supply disruptions in the Middle East, with analysts noting that hopes that China would help broker progress during recent Trump-Xi talks failed to materialise.
Goldman Sachs forecasts that every month the Strait of Hormuz remains closed adds $10 to the price of oil at year’s end, while ING said some shipping activity through the Strait of Hormuz has resumed, including several crude tankers and a Vietnamese-bound Iraqi oil shipment, though flows remain well below normal levels and could deteriorate quickly.
The American Petroleum Institute (API) estimated that crude oil inventories in the US fell by 9.1 million barrels in the week ending May 15. In the week prior, US crude oil inventories fell by 2.188 million barrels. Official data from the US Energy Information Administration (EIA) will be released later on Wednesday.
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