(May 7): Oil steadied after plunging 7% in the previous session, as the US and Iran weighed a fresh proposal to end the war in the Middle East.
West Texas Intermediate traded near US$96 barrel, while Brent closed above US$101. The two sides were circling around a new proposal, with Washington suggesting a one-page memorandum of understanding that will potentially lead to the gradual reopening of the Strait of Hormuz, a person familiar with the matter said. Iran is expected to respond via mediator Pakistan in the coming days.
The vital energy shipping route has been largely closed since the war began at the end of February, pushing up energy prices from crude to natural gas. The chokepoint now faces a double blockade, with Tehran obstructing traffic while the US prevents vessels calling at or leaving Iranian ports.
The US will end its military campaign and lift its blockade of Hormuz “assuming Iran agrees to give what has been agreed to, which is, perhaps, a big assumption,” Trump posted on social media on Wednesday, without giving details of the proposal. “If they don’t agree, the bombing starts.”
“The US and Iran were never going to agree to a comprehensive deal in a rush, but agreeing to a framework buys them time and some calm,” said Will Todman, senior fellow in the Middle East Program at the Center for Strategic and International Studies.
Meanwhile, US government data showed exports of oil products rose to a record last week as the country became a key supplier of fuel to the world amid the supply crunch. Crude inventories fell.
See also: Opec’s obituary has been written many times, yet it survives
Uploaded by Isabelle Francis
