Shafaq News
Oil pricesextended losses on Tuesday, as markets weighed prospects for resumption ofsupply through the key Strait of Hormuz against shaky physical market driversand a lack of details from a preliminary deal to end the Iran war.
By 0436 GMT,Brent crude futures fell 25 cents, or 0.3%, to $82.92 a barrel and U.S. WestTexas Intermediate inched down 9 cents, or 0.1%, to $80.66 a barrel.
On Monday, oilprices fell nearly 5% to their lowest close since March 4, after U.S.President Donald Trump said a memorandum of understanding was signed to endthe U.S.-Israeli war with Iran, though full details have not been made public.
The hostilitiesled to the closure of the Strait of Hormuz that typically carried one-fifth ofthe world's oil supply before the conflict.
Some analystsexpect a resumption of supply soon via the Strait, with other factors weighingdown physical market prices.
"Fromhere, it likely takes several weeks for tanker flow to be restored,"Morgan Stanley analysts said in a client note.
"We see50% of production back by September, and 80% by December, slightly faster thanbefore."
A broad rangeof indicators had signalled weakness in physical oil markets in recent weeks,they added.
"High U.S.exports and low China imports are the key drivers (and) in the short term(i.e. next weeks) they do not seem to come to an end just yet."
China's crudeimports slumped 29% in May to their lowest in eight years, extending a dramaticdecline for the world's importer, with its liftings of Saudi Arabia crude expected to also fall in July.
Earlyindications are that the U.S.-Iran deal would reopen the blockaded Strait ofHormuz and extend a ceasefire for 60 days, allowing negotiators to tackledifficult issues such as the future of Iran's nuclear programme.
On Monday,Iranian President Masoud Pezeshkian called the U.S.-Iran pact an"important step" toward stopping the fighting but cautioned a finalagreement for a lasting truce "has yet to take shape".
But with fulldetails yet to emerge and a permanent truce still to be reached, overall price weakness islimited.
Suvro Sarkar,the head of DBS Bank's energy research, said the deal's first phase,encompassing the Geneva signing of an extension of the 60-day ceasefire, waseasy, would buy time and kick the "nuclear can" down the road.
But the secondphase, to be watched most closely by markets for its physical impact, isthe phased reopening of the Strait of Hormuz and the wind-down of the US navalblockade on Iranian ports and vessels, he added.
"Anythingother than a clean simultaneous unlock will mean renewed volatility in oilprices," Sarkar said. "Given the trust deficit so far, it will be interesting to seehow this plays out over the next couple of weeks."
On Monday, asenior Iranian official said Iran would freeze its nuclear activity until afinal agreement, and refrain from further uranium enrichment or expansion ofnuclear facilities.
(Reuters)
Only theheadline is edited by Shafaq News Agency.
