The impact of geopolitical risks has become prominent once again in global oil markets. Escalating tension in the Middle East, the pressure of the Russia-Ukraine war on supply security, attacks targeting commercial vessels around the Strait of Hormuz, and diplomatic uncertainty between the US and Iran have driven prices upward.
Oil prices, which have gained more than 10 percent this month, began to rise again following the denial of reports suggesting that an agreement to end conflicts between the US and Iran was imminent. Crude oil prices have approached five-month highs with the latest developments.
Brent crude futures reached $110.25 per barrel as of 07.40 TSI, an increase of 1.3 percent. The price of US West Texas Intermediate (WTI) crude oil also rose by $1.36 to $99.03.
MAIN RISKS IN THE MARKET
The diplomacy headline stands out in the volatility of oil prices. On the previous trading day, the discussion of mediation efforts during a meeting between the Iranian President and the commander of the Pakistani army in Tehran had strengthened expectations of an agreement in the markets and led to a pullback in prices. However, the denial by a diplomat of reports that a near-term compromise could be reached between Washington and Tehran limited this optimism.
According to Suvro Sarkar, Head of Energy Research at DBS, there have been significant price fluctuations in the oil market recently. While profit-taking by investors and the expectation that a compromise could be reached through the mediation of Qatar or Pakistan have been effective in price movements, the lack of a finalized diplomatic solution increases uncertainty.
According to a report published on Tuesday by the Iran-based Nournews, the Tehran administration conveyed to the Pakistani army commander that negotiations with the US would not begin until their demands were met. The report also included information that a delegation from Qatar had arrived in Tehran. These developments have raised questions about the timeline on which the negotiations will proceed.
On the supply side, threats to maritime transport are being closely monitored. Ship tracking company Kpler reported that at least 18 ship attacks have been recorded in the last two weeks. LSEG analysts state that the attacks have spread beyond the Strait of Hormuz, also covering tankers in areas extending to the Gulf of Oman.
According to analysts, the attacks threaten not only the safety of oil tankers but also crude oil loadings from the Gulf and ship-to-ship oil transfers in the region. Despite oil flows from the Middle East reaching approximately 80 percent of pre-war levels, security issues around the Strait of Hormuz and the diplomatic stalemate on the US-Iran front keep the concern over supply security on the agenda in energy markets.
Data on oil stocks in the US are also among the topics followed in pricing. Data from the American Petroleum Institute (API) indicating that declines in crude oil and petroleum product stocks are continuing is considered one of the factors supporting supply concerns in the market.
News Source: 12punto
