Brent crude futures slipped 21 cents, or 0.22%, to $95.24 a barrel on June 5, while U.S. West Texas Intermediate (WTI) crude eased 10 cents, or 0.11%, to $92.94 a barrel. Despite these declines, both benchmarks are poised for their first weekly gain in three weeks, driven by heightened tensions in the Middle East and ongoing U.S.-Iran peace talks.
WTI has surged over 6% this week as geopolitical tensions in the Middle East escalated, with no breakthrough in U.S.-Iran peace negotiations. The Strait of Hormuz, a critical chokepoint for global oil flows, remains constrained, further supporting oil prices. On Thursday, Hezbollah leader Naim Qassem rejected a U.S.-brokered agreement between Israel and Lebanon, complicating peace efforts.
OPEC maintains its forecast for oil demand growth at 1.2 million barrels per day this year, despite the Middle East conflict and the closure of the Strait of Hormuz. Secretary General Haitham Al Ghais reiterated this outlook on Thursday.
“The oil market is in a race against time.”
Morgan Stanley
According to Haitong Futures, crude prices could trend towards the upper end of their trading range as tightening supply-demand conditions coincide with rapidly shrinking global oil inventories. Analysts caution that even with a ceasefire, it may take months for shipping through the Strait of Hormuz to normalize.
Saudi Aramco CEO Amin Nasser warned last month that disruptions in the Strait of Hormuz could delay stability in global oil markets until 2027, potentially impacting nearly 100 million barrels of oil supply weekly. Morgan Stanley described the oil market as being in "a race against time," noting that factors preventing a sharper rise in crude prices may weaken if the strait remains closed through June.
Background
The ongoing geopolitical tensions and supply constraints underscore the volatility in the oil markets. Investors should closely monitor developments in the Middle East and the status of the Strait of Hormuz, as these factors will likely influence future price movements.
The ongoing geopolitical tensions and supply constraints underscore the volatility in the oil markets. Investors should closely monitor developments in the Middle East and the status of the Strait of Hormuz, as these factors will likely influence future price movements.
