Oil prices steadied on Monday as Iran and the United States agreed to halt recent hostilities in the Gulf, raising hopes for a de-escalation that could protect global crude flows. The two countries also agreed to renew talks over the strategic Strait of Hormuz, a move that may salvage an interim peace deal threatened by days of tit-for-tat strikes.
Market Reaction and Price Movements
Brent crude futures were up 4 cents at $72.03 a barrel by 0803 GMT on Monday, while U.S. West Texas Intermediate crude gained 44 cents, or 0.6%, to $69.67. The modest gains came after a turbulent period: Brent crude fell 10.6% last week, marking a third consecutive weekly decline, as crude shipments through the Strait of Hormuz rose to their highest since the U.S.-Israeli war on Iran began in late February.
According to ING analysts in a note on Monday, "There's still plenty of risk facing the oil market. Even so, participants appear to be ... focusing on what a continued recovery in oil flows would mean for the global balance." The analysts added, "This complacency is odd and clearly leaves significant upside risk if the supply recovery proves slow."
Resumption of Loadings Despite Attacks
Middle East producers are pushing ahead with loading oil and liquefied natural gas despite fresh ship attacks in the Strait of Hormuz and renewed strikes between the U.S. and Iran in recent days, according to shipping data. Saudi oil giant Aramco resumed crude oil loadings on Friday at its Ras Tanura terminal, west of the Strait of Hormuz, after a halt of nearly four months.
Loadings continued even after a helicopter belonging to the company crashed on Sunday at Ras Tanura, killing 14 nationals. The cause of the crash remains unknown. The incident did not disrupt operations, signaling producers' determination to maintain supply flows amid ongoing geopolitical tensions.
Broader Implications for Oil Markets
The agreement to halt attacks and restart talks over the Strait of Hormuz, through which about 20% of the world's oil passes, has provided some relief to markets. However, analysts warn that the situation remains fragile. The resumption of loadings at Ras Tanura, one of the world's largest oil terminals, is a positive sign for supply recovery, but the risk of further disruptions remains high.
The U.S.-Iran conflict had previously led to significant supply constraints, with Brent crude spiking earlier this year. The recent agreement could help stabilize prices, but ING analysts caution that the market's current complacency may be unwarranted, given the potential for a slow recovery in supply.
