(June 22): Oil rose after President Donald Trump threatened strikes on Iran if Hezbollah keeps attacking Israel, raising concerns about progress for peace talks between Washington and Tehran.
Brent crude climbed as much as 2.2% at the open to US$82.30 a barrel, while West Texas Intermediate was near US$77. Negotiations got off to a rocky start in Switzerland on Sunday after Iranian media reported Tehran halted talks after the latest Trump threat, but people familiar said they were continuing. The Islamic Republic has accused Israel of violating a truce in Lebanon.
The high-level meeting in the Swiss resort of Bürgenstock is happening days into a 60-day window for negotiations, after Trump signed a memorandum of understanding last week, which began the process of de-escalation. Millions of barrels of oil continued to flow through the Strait of Hormuz over the weekend, even after Iran claimed to have closed the waterway again.
Speaking Sunday to Fox News, Trump said he told Iranian leaders directly that if they close Hormuz, “You won’t even make it back” to Iran, using an expletive. A resolution to the fighting in Lebanon will be decisive for the success of the talks in Switzerland, according to an official familiar with the discussions, who asked not to be identified discussing sensitive information.
The war in the Middle East has choked off supply in a region responsible for a third of the world’s oil production. Crude futures have come off in recent weeks — although prices remain higher than pre-war levels — after global refiners found temporary workarounds, and as the prospect of an end to the conflict fueled optimism over a rapid return to normal.
A peace deal would in theory unleash a gush of supply into a market where there’s less demand for now, especially given a slump in purchases by top importer China. About 80 million barrels of crude are set to suddenly hit the market should Hormuz fully reopen, threatening to leave refiners swamped.
See also: Qatar brings empty LNG ships through Hormuz as exports rise
Meanwhile, Persian Gulf producers are gearing for a production ramp-up, with Kuwait canceling earlier force majeure notices. Abu Dhabi National Oil Co told customers to resume loading supply from inside the Persian Gulf, while selling spot crude in a series of tenders.
Uploaded by Isabelle Francis
