Oil prices held onto recent gains after US President Donald Trump cast fresh doubt on the durability of the ceasefire with Iran, renewing concerns that disruptions to Middle East energy flows could drag on for longer. Brent crude traded above $104 a barrel, after climbing 2.9% in the previous session, while West Texas Intermediate hovered near $98. The market remains focused on the Strait of hormuz, the critical chokepoint through which a large share of the world's crude, liquefied natural gas, and refined fuels normally passes.
Trump said the ceasefire was on “massive life support” after dismissing Tehran's latest response to a US-backed peace proposal aimed at ending the 10-week conflict.
According to a person familiar with the negotiations, Iran has demanded that Washington lift its naval blockade and provide sanctions relief, while allowing Tehran to retain some control over traffic through the Strait of Hormuz, as per Bloomberg reports.
The US president is expected to meet his national security team to discuss the conflict, including the possibility of renewed military action, according to Axios. Trump also told Fox News that he is considering reviving plans to escort commercial ships through the strait.
Although a ceasefire has formally been in place since early April, repeated flare-ups — including attacks on vessels — have kept shipping activity severely constrained and prevented a meaningful recovery in energy flows.
Rising Fuel Prices Increase Political Pressure
The prolonged disruption is beginning to exact a domestic political cost. Petrol prices in the US have risen sharply, intensifying inflation concerns and adding pressure on Trump and the Republican Party ahead of November's midterm elections. Washington has already released additional emergency oil supplies in an attempt to contain fuel costs.
The conflict is also expected to feature prominently during Trump's meeting with Xi Jinping, as the US pushes Beijing over its continued purchases of Iranian crude. This week, the US Treasury sanctioned more entities accused of facilitating oil sales from Iran to China.
Saudi Aramco Chief Executive Amin Nasser said global markets are losing about 100 million barrels of supply for every week the Strait of Hormuz remains effectively shut. The company has rerouted some exports through its Red Sea facilities, though buyers — including China — have reduced purchases in response to elevated prices.
Despite the geopolitical tensions, some indicators suggest the market's immediate tightness has moderated. Brent's prompt spread, a closely watched gauge of near-term supply conditions, has narrowed to around $4 a barrel in backwardation, down from nearly $10 early last month.
ALSO READ: War To Resume? Trump Says Iran Ceasefire Weakest, On 'Life Support'
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