Update: WTI Oil Rises as Iran and Israel Traded Strikes But Fell Back From Highs as They Agreed to Stop
West Texas Intermediate (WTI) oil rose on Monday as Iran launched weekend missile strikes on Israel on the weekend while Israel responded with strikes of its own but fell off session highs after they agreed to halt further attacks.WTI crude oil for July delivery closed up US$0.76 to settle at US$91.30 per barrel, after earlier touching US$95.47. August Brent oil was lost seen up US$1.13 to US$94.22.The rise comes as Iran on the weekend launched strikes on Israel to deter Israel's occupation of southern Lebanon and end its attacks on Beirut in its war on the Iran-backed Hezbollah militant group. However Reuters reported the two agreed to halt their strikes, paring gains.The renewed hostilities threatened to again test the two-month ceasefire between Iran and the United States, while talks between the two countries are stalled due to Iran's insistence Israel first must end its war in Lebanon. The fighting is lowering hopes for a peace deal that would reopen the Strait of Hormuz, freeing up the oil exports from Persian Gulf nations that supplied 20% of daily oil demand and ending the largest-ever supply shock."Oil has once again moved towards the upper end of its established trading range after Israel and Iran resumed exchanging fire. Despite repeated optimism from the US administration, a lasting peace agreement appears increasingly elusive. The near closure of the Strait of Hormuz continues to tighten global energy markets, with several oil majors warning that the window before physical shortages begin to emerge may be measured in weeks rather than months," Saxo Bank noted.OPEC+ on the weekend agreed to raise July export quotas by 188,000 barrels per day, but the measure is having little market effect since with much of its members' supply capacity remaining trapped within the Persian Gulf. Russia's quota has been raised to 9.82 million barrels per day, according to Rystad Energy, but the country's shipment are at only 9.2-million bpd due to Ukrainian attacks on the country's oil infrastructure"With the Strait of Hormuz closed, the issue is not whether OPEC+ raises paper quotas, but whether additional barrels can actually reach the market. OPEC+'s decision to continue increasing production by 188,000 barrels per day for June confirms that the group remains on track to unwind the first tranche of voluntary cuts by September, if not earlier. But in the current market, the physical impact of such a decision would be close to zero," Rystad noted.
