Oil Prices Slightly Lower, Markets Still Cautious of Middle East Supply
JAKARTA - Oil prices fell slightly on Monday amid a market that is still watching the development of talks between the United States and Iran. Concerns about supply disruptions due to shipping bottlenecks in the Middle East have also not subsided.
Citing Arab News, Tuesday, April 7, Brent crude fell 36 cents or 0.33 percent to US$108.67 per barrel at 15.22 Saudi Arabian time. Meanwhile, US West Texas Intermediate (WTI) crude fell 96 cents or 0.86 percent to US$110.58 per barrel.
This movement is much smaller than the spike in the previous session. On Thursday, WTI rose 11 percent and Brent rose 8 percent. The increase was the largest absolute price spike since 2020.
The US and Iran are said to have accepted a framework plan to end hostilities. However, Iran refused to immediately reopen the Strait of Hormuz, after US President Donald Trump threatened Tehran with "hell" if it did not reach an agreement by the end of Tuesday.
Iran also said it had formulated its position and demands in response to the latest ceasefire proposal conveyed through intermediaries.
The Strait of Hormuz, an important route for the shipment of oil and petroleum products from Iraq, Saudi Arabia, Qatar, Kuwait, and the United Arab Emirates, is still largely closed due to Iran's attacks on shipping since the war began on February 28.
However, shipping data shows that a number of ships have continued to pass through the Strait of Hormuz since Thursday. The ships include tankers operated by Oman, a French-owned container ship, and a Japanese gas carrier. According to Arab News, this reflects Iran's policy of still allowing ships from countries considered to be more friendly to pass.
SEB Research analyst Ole Hvalbye said the market is still trying to read the direction of the situation going forward. He also highlighted that Europe continues to lose crude oil and physical product supplies to Asia as the market tightens.
Still referring to the Arab News report, supply disruptions from the Middle East have prompted refineries to seek alternative crude sources, especially for physical cargoes in the US and the UK North Sea. US WTI spot premiums have also jumped to record highs due to competition between Asian and European refineries.
Refineries in India have also delayed maintenance schedules to meet domestic fuel demand. On the other hand, OPEC+ agreed to increase production by 206,000 barrels per day for May.
Saudi Arabia also set the official selling price of Arab Light oil for Asia at a record premium of US$19.50 per barrel above the Oman-Dubai average, up US$17 from the previous month, according to Aramco.
Meanwhile, Russian supplies have also been disrupted by Ukrainian drone attacks on export terminals in the Baltic Sea. However, the Ust-Luga terminal reportedly resumed loading cargo on Saturday. Exports from the Tuapse port on the Black Sea are expected to rise to 794,000 metric tons in April, from the planned 755,000 metric tons in March.