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Commerzbank’s Charlie Lay and Dr. Henry Hao note that Brent and WTI firmed as markets reassessed prospects for a Hormuz deal, with the previous close at USD88.91 for Brent and USD83.20 for WTI. Iran insists the Strait of Hormuz will stay closed until its conditions are met, while elevated geopolitical risks could keep energy markets tight and renew upward pressure on US inflation.
Oil buoyed by Hormuz uncertainty
“The conflicting signals suggest negotiations are progressing, but a deal capable of restoring normal shipping through the Strait of Hormuz does not yet appear imminent.”
“Geopolitical risks remain elevated elsewhere in the region. A US Navy helicopter fired on a cargo vessel that attempted to breach the US blockade of Iranian ports, while separate incidents involving commercial vessels were reported in the Gulf of Oman and off Yemen’s Red Sea coast. European diesel prices also surged amid disruptions to refining capacity elsewhere, reinforcing concerns over already-tight energy markets.”
“Lower energy prices in July should help ease headline inflation, although the subsequent rebound in oil prices means energy could again place upward pressure on inflation in the coming months.”
“Brent oil prices rose as Iran reiterated that the Strait would remain closed until its conditions are met, despite Pakistan suggesting that Washington and Tehran were “close to some sort of arrangement”. The USD was little changed.”
