West Texas Intermediate (WTI) crude oil prices remained flat for the second consecutive day this week, with the US benchmark trading around the $70.00 mark. This stability comes despite ongoing uncertainty surrounding the US-Iran conflict and recent skirmishes over the weekend, as investors appear to be betting on a negotiated resolution to the tensions, keeping oil prices at pre-war levels [1].
The situation in Iran remains unclear. US President Donald Trump stated on Monday that Tehran had requested a meeting following a series of reciprocal attacks over the weekend. However, Iran’s Foreign Ministry denied any plans to meet with US negotiators this week, instead announcing that it would send an expert delegation to Doha [1].
Hostilities have significantly impacted oil tanker traffic through the Strait of Hormuz, a critical chokepoint for global oil shipments. According to the Strait of Hormuz Live Tracker, only 5 vessels crossed the waterway in the last 24 hours, compared to an average of around 30 last week and a daily average of 160 before the conflict began [1]. The status of the strait remains a contentious issue, with Iranian officials asserting national sovereignty over the passage, while the US has called for Iran to allow free and safe passage for all vessels [1].
Despite depleted global reserves and the sharp reduction in tanker traffic, oil prices have returned to pre-war levels. WTI is set to close the month with a nearly 20% decline, adding to a 15% drop in May following the first US-Iran ceasefire agreement [1]. Market participants appear to believe that a lasting peace agreement will eventually be reached, which is preventing further appreciation in oil prices. However, the article notes that only time will tell if these market expectations are overly optimistic [1].
CONCLUSION
WTI oil prices have stabilized around $70 as markets anticipate a negotiated end to the US-Iran conflict, despite ongoing uncertainty and a dramatic drop in tanker traffic through the Strait of Hormuz. The market's optimism has kept prices at pre-war levels, but the sustainability of this sentiment remains to be seen.