Oil prices rise as doubts linger over US

Oil prices are slightly up on Tuesday, after a sharp fall on Monday, as uncertainty remains over negotiations between Iran and the United States mentioned by Donald Trump to end the war in the Middle East.

Around 11:05 GMT (12:05 in Paris), the price of a barrel of North Sea Brent crude for May delivery was up 1.36% at $101.30.

Its American counterpart, the barrel of West Texas Intermediate for the same month’s delivery, gained 2.44% to $90.28.

Donald Trump claims his administration is in talks with an unidentified “high leader,” but Iran denies it.

The Iranian Parliament President denies any negotiations with the United States, citing “false information” aimed at “manipulating financial and oil markets and getting the U.S. and Israel out of the quagmire they are in.”

“The idea that Trump can act alone and influence events does not hold if the other party refuses to cooperate,” says analyst Ipek Ozkardeskaya from Swissquote.

According to her, the optimism related to the U.S. president’s statements may “hardly endure” if Iran does not have the willingness to defuse the conflict.

And while the market tries to understand possible diplomatic discussions, “there is still no prospect of the reopening of the Strait of Hormuz in the short term, which is the most decisive factor for oil prices,” notes Arne Lohmann Rasmussen, analyst at Global Risk Management.

The almost paralysis of the strait between the Gulf and the Gulf of Oman is the main factor for the rise in oil prices, as about 20% of the world’s production usually transits through it and a large part cannot be diverted through other routes.

On Monday, the director of the International Energy Agency (IEA), Fatih Birol, stated that “11 million barrels” of oil are lost each day, out of a global production of just over one hundred million barrels per day.

Furthermore, as long as the conflict continues, the risk of strikes and long-term damage to energy infrastructure increases.

The U.S. president has announced a five-day extension — until the end of the trading week — of his latest ultimatum against Tehran (strikes against Iranian power plants if the blockade of the Strait of Hormuz remains).

“But no one knows what will happen next,” Ms. Ozkardeskaya points out.

AFP