Oil prices experienced a mixed performance on Tuesday, influenced by U.S. military actions in southern Iran and President Donald Trump's complex diplomatic signals regarding peace negotiations with Tehran. Brent crude futures for July saw a 2% increase to $98.26 a barrel in Asian trading. Conversely, U.S. West Texas Intermediate (WTI) futures for July traded 5.1% lower at $91.73 per barrel, reflecting a significant dip from Friday's close. Notably, there was no WTI price settlement on Monday due to the U.S. Memorial Day holiday.
The U.S. military confirmed it carried out "self-defense strikes in southern Iran today," identifying targets as vessels allegedly attempting to deploy mines and missile launch locations. The U.S. Central Command stated these operations were executed "to protect our troops from threats posed by Iranian forces."
Adding another layer of complexity to ongoing peace talks, President Trump announced via social media on Monday that he had urged Saudi Arabia, Qatar, Pakistan, Turkey, Egypt, and Jordan to join the Abraham Accords. These agreements aim to normalize relations between Arab nations and Israel.
While President Trump characterized negotiations with Iran as "proceeding nicely," he also issued a stern warning that military action could be reinstated if discussions falter. "It will only be a Great Deal for all or, no Deal at all," Trump asserted in his post.
Financial analysts are observing increasing strain in the global oil market. UBS, a Swiss multinational investment bank, noted on Friday that declining inventories, coupled with ongoing disruptions to shipments through the Strait of Hormuz, are contributing factors. The bank reported that global oil inventories decreased by a combined 246 million barrels in March and April, with potential cumulative production losses exceeding 1 billion barrels by the end of May. These sharp inventory drawdowns suggest a market that remains "strongly undersupplied," according to UBS, despite a rise in oil stored on tankers due to rerouted U.S. exports to Asia.
Correction: The article has been updated to clarify that WTI futures data pertains to July contracts.
