Oil prices increased on Wednesday as investors evaluated the stability of a ceasefire between Iran and Israel, while remaining close to multi-week lows due to the expectation that crude oil flows would remain uninterrupted.
Brent crude futures climbed by 85 cents, or 1.3 percent, to $67.99 a barrel at 03:41 GMT (currently trading above $67.05), while U.S. West Texas Intermediate (WTI) crude rose by 87 cents, or 1.4 percent, to $65.24 (currently trading above $65.25).
Brent settled on Tuesday at its lowest price since June 10, and WTI since June 5, both prior to Israel’s surprise attack on key Iranian military and nuclear facilities on June 13.
Prices had surged to five-month highs following the U.S. attack on Iran’s nuclear facilities over the weekend.
Moderating energy prices
“Global energy prices are moderating following the Israel-Iran ceasefire. The base case for our oil strategists remains anchored by fundamentals, which indicate sufficient global oil supply,” reported Reuters, citing JP Morgan analysts.
U.S. airstrikes did not eliminate Iran’s nuclear capability and merely delayed it by a few months, according to a preliminary U.S. intelligence assessment, as a tenuous ceasefire brokered by U.S. President Donald Trump took effect between Iran and Israel.
Earlier on Tuesday, both Iran and Israel indicated that their air conflict had concluded, at least for the time being.
As the two nations lifted civilian restrictions following 12 days of conflict—which included a U.S. attack on Iran’s uranium-enrichment facilities—each sought to assert victory.
“The Israel-Iran ceasefire is likely to prove fragile. But as long as both parties remain unwilling to attack export-related energy infrastructure and/or disrupt shipping flows through the Strait of Hormuz, we expect bearish fundamentals in the oil market to continue … from here,” reported Reuters, citing Capital Economics chief climate and commodities economist David Oxley.
Read more: Crude oil prices plunge 3 percent to $68.75 as tensions ease in the Middle East
Concerns over the Strait of Hormuz
Direct U.S. involvement in the conflict raised concerns among investors about the Strait of Hormuz, a narrow passage between Iran and Oman, through which approximately 18 million to 19 million barrels per day (bpd) of crude oil and fuel transit, nearly a fifth of global consumption.
Investors are now awaiting U.S. government data regarding domestic crude and fuel stockpiles, which is due on Wednesday.
Industry data revealed that U.S. crude inventories fell by 4.23 million barrels in the week ending June 20, according to market sources citing figures from the American Petroleum Institute on Tuesday.
