Oil rises as Iran reviews proposed US agreement

Oil prices climbed further today as Iran examined a proposed US deal to end the war between the two nations, according to Mehr News. Brent crude futures increased by $0.85, or 0.9%, to $95.83 per barrel, while US West Texas Intermediate rose $1.08, or 1.2%, to $93.24 per barrel. Both benchmarks had already gained over 3% and 5% respectively the prior day after a 16% drop in May fueled by hopes of a peace agreement. US President Donald Trump stated yesterday that negotiations with Iran were ongoing, with expectations of a temporary deal to extend the ceasefire and reopen the Strait of Hormuz within the next week. However, Iran has not yet responded to the proposed final text of the agreement, according to a source cited by Mehr. Despite these talks, oil flows through the Strait of Hormuz remain restricted due to ongoing conflict. Analysts warn that global oil inventories could reach critically low levels before summer demand peaks if stockpiles continue depleting at the current rate. An executive from Abu Dhabi’s state oil company highlighted August as a potential tipping point for significantly higher prices if demand rises and the Iran war disrupts supply further. Market analysts emphasize that oil prices are now hinging on progress in US-Iran negotiations, particularly Iran’s stance on the Strait of Hormuz and actual tanker movements. The current risk premium in oil prices may persist or ease depending on the negotiations’ outcome. Meanwhile, Iran has effectively halted most non-Iranian shipping in and out of the Gulf since the war began, disrupting about one-fifth of global oil and liquefied natural gas flows and driving prices up by over 50%. Lebanon announced a partial ceasefire between Hezbollah and Israel yesterday, marking a limited de-escalation in a conflict that has intensified broader tensions with Iran. Separately, Russia launched drone and missile strikes across Ukraine early today, killing 18 people and wounding over 100, according to authorities. A Reuters poll also projected a 3.6 million barrel decline in US crude stockpiles for the week ending May 29, extending prior inventory draws.