Oil prices rose sharply on May 11 after US President Donald Trump called Iran's response to the American peace initiative unacceptable.
Points of attention
- US President Donald Trump's remarks on Iran led to a significant increase in oil prices, with Brent crude and US WTI crude rising sharply.
- The ongoing geopolitical conflicts and risks in the Strait of Hormuz are major factors contributing to the fluctuations in oil prices on the global market.
Oil prices are rising: what is the reason?
Brent crude rose $4.16 to $105.45 per barrel. US WTI crude rose $4.38 to $99.80 per barrel.
Last week, both contracts fell by 6% as markets hoped for a quick end to the conflict and the opening of the Strait of Hormuz.
The oil market continues to trade like a geopolitical headline machine, with prices fluctuating wildly based on every comment, denial or warning from Washington and Tehran, explains Phillip Nova senior analyst Priyanka Sachdeva.
IG analyst Tony Sycamore noted that the market's attention is now focused on Trump's visit to China. According to him, there is hope that the US president will be able to convince Beijing to use its influence on Iran to achieve a full ceasefire.
Saudi Aramco CEO Amin Nasser said the world has lost about 1 billion barrels of oil in the past two months, and even after supplies resume, the market will take time to stabilize, he said.
Analysts at ING Bank believe that even after the acute phase of the conflict is over, the geopolitical premium to the price of oil will not disappear — due to the risk of new disruptions in the Strait of Hormuz and depletion of reserves.
Their forecast:
Brent will remain above $90 per barrel until the end of 2026;
In 2027, the price will drop to $80-85 per barrel.
Donald Trump previously rejected the Iranian peace offer. He wrote on Truth Social: "Just read the response from the so-called 'representatives' of Iran. I don't like it — completely unacceptable."
