(May 19): Oil fell on Tuesday after US President Donald Trump said he had called off a strike on Iran planned for Tuesday following an appeal by Persian Gulf allies.
Brent dropped below US$110 ($140.81) a barrel, after gaining 2.6% on Monday, while West Texas Intermediate (WTI) for July was below US$103. Trump said in a social media post that the leaders of Saudi Arabia, Qatar and the United Arab Emirates asked “to hold off on our planned Military attack of the Islamic Republic of Iran, which was scheduled for tomorrow, in that serious negotiations are now taking place”.
Oil has rallied on uncertainty about the talks, and the possibility that the near-total closure of the Strait of Hormuz will choke off Persian Gulf energy supplies for longer. Trump has repeatedly threatened renewed military action against Iran without following through, and Tehran did not immediately confirm renewed discussions.
“The president’s calling off tomorrow’s ‘scheduled’ attack is a positive,” said Mark Malek, the chief investment officer of Muriel Siebert & Co. “The change of plans just shows how stochastic the situation is with negotiations.”
Trump said the US is prepared to attack if an acceptable deal isn’t reached but didn’t set a deadline.
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“I put it off for a little while, hopefully maybe forever, but possibly for a little while, because we have had very big discussions with Iran, and we will see what they amount to,” he said at a White House event on Monday evening, hours after his social media post.
A US naval blockade has left Iran’s Kharg Island oil terminal idle for at least 10 days, cutting off Tehran’s petroleum revenues and withdrawing millions of barrels from the market. That’s a reversal for the Islamic Republic, which had been the strait’s dominant crude exporter after barring other nations’ vessels from the waterway in the opening weeks of the war.
Crude briefly pared gains on Monday after Iran’s semi-official Tasnim news agency reported that Washington had proposed a temporary waiver on oil sanctions until a final deal is reached. A US official who refused to be named due to the sensitivity of the matter said the story was false, but did not elaborate.
See also: Oil edges up after plunging on optimism over US-Iran agreement
Meanwhile, the US issued a new waiver allowing the sale of Russian crude oil and petroleum products that are already loaded on tankers, days after the previous one lapsed.
Prices:
- Brent for July dipped 2.2% to US$109.59 a barrel at 10.23am in Singapore on Tuesday
- WTI for July delivery fell 1.7% to US$102.59 a barrel
- The less-active June contract, which expires later on Tuesday, declined 1.2% to US$107.40 a barrel
Uploaded by Tham Yek Lee
