Oil Prices Slide on Prospects of Extended US-Iran Ceasefire
International crude oil futures posted notable declines on May 29, driven by market optimism over a possible extension of the ceasefire between the United States and Iran, which eases supply jitters in the global energy market.
Reuters reports that near-term and mainstream crude contracts registered visible losses across the board. As of 10:59 GMT, July Brent crude futures fell $1.66, or 1.77 per cent, to settle at $92.05 per barrel. August Brent futures, which hold higher trading liquidity, dropped $1.63 to $91.07 per barrel. US WTI crude futures also retreated $1.55, marking a 1.74 per cent drop to $87.35 per barrel.
The latest pullback has dragged crude benchmarks into their steepest weekly losses in months. Brent crude has tumbled around 11 per cent over the week, representing its sharpest weekly decline since early April. WTI crude has also recorded a nearly 10 per cent weekly drop, hitting its most substantial weekly fall since mid-April. Market trading has witnessed intense volatility, with both major crude benchmarks swinging by as much as $6 per barrel amid shifting updates on regional conflict de-escalation and shipping conditions in key maritime routes.
The Strait of Hormuz, a vital global energy shipping corridor, continues to see suppressed vessel traffic amid lingering regional tensions. The waterway once carried one-fifth of the world’s total oil and liquefied natural gas supplies, yet current operational flow remains far below pre-conflict levels. The prolonged disruption has rippled through global energy trade, with Japan’s Middle Eastern crude imports plunging 66 per cent year on year in April.
Leading financial institutions have adjusted their crude price outlooks to adapt to the evolving market situation. Reuters states that Commerzbank has revised down its Brent crude price forecasts, projecting the benchmark to reach $90 per barrel by late September and $85 per barrel by the end of the year. The adjusted forecast is based on the expectation that shipping restrictions in the Strait of Hormuz will persist for at least two more months.
US domestic energy fundamentals have also shaped recent market movements. The US Energy Information Administration confirms that US crude oil, gasoline and distillate stockpiles declined last week, driven by rising consumption from refineries and end users. Meanwhile, the country’s crude oil exports fell to 4.4 million barrels per day, a daily drop of 1.16 million barrels.
Regional oil trade has shown tentative signs of recovery alongside fluctuating geopolitical risks. The Philippines welcomed its first shipment of Iranian crude since regional trade disruptions earlier this year. Shipping tracking data shows the Suezmax tanker Ocean Start delivered a 1 million-barrel crude cargo to the Bataan refinery operated by Petron on May 17, reopening a new bilateral energy trade channel in Southeast Asia.
GlobalData TS Lombard notes that oil revenue remains a core economic priority for Iran in current market conditions. Uncertainty still lingers over the country’s future negotiation strategies. Sustained shipping route disruptions are set to accelerate the development of alternative crude export channels, diversifying Iran’s energy trade layout and reshaping regional oil supply patterns in the long run.
