Brent crude prices rose in early trading on Friday, reversing the losses recorded during the previous session and approaching $90 a barrel. As long as the US–Iran conflict remains unresolved, the outlook for crude prices is likely to retain a bullish bias. Prices rose despite OPEC cutting its forecast for global oil-demand growth this year from 780,000 to 580,000 barrels per day, a development that would normally create selling pressure. Traffic through the Strait of Hormuz remains severely disrupted by Iranian restrictions and US blockade measures, with only a fraction of the usual number of vessels able to leave the Persian Gulf. Before the conflict, the Strait carried approximately one-fifth of global oil flows. Against this backdrop, crude traders will remain focused on efforts to establish a new framework for negotiations between the parties to the conflict. Attention will also remain on bilateral discussions between Oman and Tehran over a possible system under which vessels would be charged for passage through the Strait. Any progress or setbacks in these discussions are likely to generate further volatility in oil prices. However, the market retains a bullish bias, meaning that any decline is unlikely to take Brent sustainably below $80 a barrel until there is a realistic prospect of an agreement between Iran and the United States.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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