Meanwhile, U.S. crude, gasoline inventories decline – but far less than in previous weeks: File Image/Pixabay.
In a repeat of recent trading patterns, oil on Wednesday dropped again as media and Washington reported that a peace deal between the U.S. and Iran was getting closer to reality – but U.S. president Donald Trump claimed the Islamic republic was “negotiating on fumes,” and Iran warned that its military was “lying in wait” if the brash billionaire restarted combat.
Another sign that force, not diplomacy may ultimately settle the hostilities between the U.S. and Iran was the Czech Republic, whose foreign minister Petr Mainka said Prague had begun discussions about contributing specialized capabilities to help secure the Strait of Hormuz, adding, “We have some unique passive surveillance capabilities.”
Oil trading was also clouded by contradictory statements: Iran’s state TV claimed it obtained a draft of an initial understanding between Washington and Tehran toward ending the conflict, in which Iran would restore shipments through the Hormuz to pre-war levels within a month – but Washington said the report was false.
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Today’s one of those days where geopolitics take over
Tim Ghriskey, senior portfolio strategist, Ingalls & Snyder
Brent eased 0.5 percent to $99.06 per barrel after surging nearly 4 percent in the previous session; West Texas Intermediate for July delivery declined 0.9 percent to $93.09 per barrel.
Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, remarked, “Today’s one of those days where geopolitics take over, with competing statements coming in fast and furious; there’s so much news out there.”
Meanwhile, the American Petroleum Institute estimated that U.S. crude inventories fell by 2.8 million barrels in the week ending May 22, compared to a plummet of 9.1 million barrels the week prior; gasoline inventories declined by 3.1 million barrels in the same time frame, compared to a 5.8 million barrel draw the week prior.
In other oil news on Wednesday, Japan will officially switch the benchmark for calculating gasoline price subsidies back to Dubai crude prices from Brent crude, effective June 4, after Dubai crude prices stabilized and the gap between Dubai and Brent narrowed.
The Iran war exposed Japan’s dependence on Middle Eastern crude as its defining structural vulnerability: the Hormuz blockage effectively closed transport of over 95 percent of Japan’s crude oil imports.
Ship & Bunker News Team
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