-- Oil prices eased early on Thursday, falling off four-year highs touched overnight during Asian trade on a report the U.S. may end the ceasefire with Iran as the largest-ever supply shock hits hardest for the continent that relies on Persian Gulf supplies now trapped behind the closed Strait of Hormuz.
West Texas Intermediate (WTI) crude oil for June delivery was last seen down US$2.44 to US$104.44 per barrel after touching US$110.93 overnight, while June Brent oil was down US$4.01 to US$114.02 after it reached US$126.34 overnight, the highest since 2022.
WTI has now climbed 59% since the war began on Feb. 28, when Iran blocked the Strait of Hormuz, a key chokepoint for roughly 20% of global oil supply, following attacks by the United States and Israel. The United States is now blockading Iranian ports and Iran has demanded that they should be lifted before peace talks can resume, which the U.S. is refusing to do, continuing the largest-ever supply shock.
The shortage is hitting hardest in Asia, which buys 80% of Persian Gulf exports, with countries bidding up spot prices and increasingly looking to tap China's strategic stockpiles to avoid shortages.
"There continue to be reports of fuel shortages in rural communities in several (Asian) countries whilst fuel distribution appears to be a bit of hap hazard. We continue to see more and more essentially government to government deals with China allowing some exports to friendly countries and Thailand considering providing more support to neighboring countries," Vikas Dwivedi, Global Energy Strategist at Macquarie Group, wrote.
Still, there is little sign of any negotiations to end the war and reopen the blocked Strait. Talks scheduled between the United States and Iran expected to be held last weekend in Pakistan failed to take place after the U.S. refused an Iranian demand to lift a blockade of Iranian ports. The Wall Street Journal reported U.S. President Trump is asking other countries to join a coalition to reopen the Strait in what the American government is calling the "Maritime Freedom Construct" as it looks for its embassies to press allies to join, while Trump warned of an extended blockade of the Strait until Iran agreed to end its nuclear program.