Brent oil prices eased in early Wednesday trading but remain close to $100. Markets reacted favourably to the US administration’s announcement of an extension to the ceasefire with Iran, which was about to expire. Some pressure was alleviated, as a resumption of military attacks would increase risks to the region’s infrastructure and set negotiations back to square one. However, the impact of the announcement was limited and prices barely moved. The situation on the ground has not changed significantly since the beginning of the conflict, with the Strait of Hormuz effectively closed and approximately a fifth of the world’s oil kept out of the global market. The longer this situation persists, the greater the impact of the supply shock caused by the blockade, and the higher the price traders will be willing to pay to secure future deliveries of crude. Against this backdrop, prices are likely to remain close to current levels in the short term, with upside risks increasing the longer the disruption continues.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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