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Oil prices settle at 2% after Trump rejects the return to Iran ceasefire terms

Brent crude prices rose by 2.1% Thursday, ending a losing streak of three sessions, following a Wall Street Journal report that said U.S. president Donald Trump was 'not interested' in returning to the terms of an agreement reached with Iran in July. The report cited people who were familiar with the issue to say that the Trump administration had repeatedly told mediators that it was not interested in reviving June's agreement. This has complicated a flurry diplomatic efforts this past week to restart the talks. Brent crude futures ended up $1.86 or 2.1% higher at $89.70 per barrel. U.S. West Texas Intermediate Crude futures closed up $1.30 or 1.6% to $83.53. Both benchmarks recovered as investors reduced expectations of a diplomatic break that could?boost oil flows from Middle East.

UBS analyst Giovanni Staunovo believes that a lack of progress in the talks combined with the continued restriction of flows could have led to a change in market perceptions. Washington had confirmed earlier on Thursday that it was not engaged in any talks with Iran, despite diplomatic efforts from other countries to reengage the two parties. "We don’t want to talk to them." Trump said to reporters in the Oval Office that the U.S. is focused on punishing Tehran financially and will penalize countries who do business with Iran. The U.S. announced "the toughest sanctions in the history" against Iran on?Monday. Treasury Secretary Scott Bessent said the measures will reduce the need for new major military operations.

Ebrahim Azizi is the head of the national security committee in Iran's parliament. He said that sanctions are "inhumane" and "hostile", but they have lost their effectiveness. Qatar's Prime Minister visited Tehran Thursday to try to restart diplomatic talks in order to end the U.S. - Israeli war against Iran. This was on the eve its six-month anniversary. Mohsen Rezaei, Iran's top official in charge of security, warned that Tehran will target U.S. economic and military interests if Washington causes any "mischief", during talks with Qatari officials.

PROLONGED UNCERTAINTY

The dispute is centered around Iran's nuclear program, which will not be resolved soon. Iran also recognizes the importance of its geographic position and the leverage it has over the Strait of Hormuz, so there remains the risk of prolonged insecurity, according to Priyanka Sahdeva, Phillip Nova's head of market insight.

Before the conflict started in late February, the Strait of Hormuz was responsible for about one-fifth of daily global oil and liquefied gas supplies. According to Kpler, the flow of vessels through the strait increased slightly on Wednesday. Ten commodity vessels were able to?transit the waterway. This is up from recent lows, but still lower than the 10-day-average of 15. The vessels that left the strait were a fuel tanker for medium-range travel, a bitumen carrier and a bulk ship. The consultancy?IIR reported that Kuwait Integrated Oil Industries?Co, a state-owned company, had restarted at 60% capacity all three crude units of its Al-Zour oil refining facility with a daily production rate of 615,000 barrels. In May, Iranian drones had attacked the refinery. Geopolitical tensions also escalated when Russia said it would strike British military targets in and outside Ukraine as a response to Ukrainian attacks on Russian territory with British-supplied cruise missiles. Trump, on the other hand,'said that Russian President Vladimir Putin would not attack a North Atlantic - Treaty Organization (NATO), and he played down media reports this week that CIA Director John Ratcliffe had warned Russian officials about such an attack. Britain was one of NATO's founding members. (Reporting from Siddharth Cavale and Laila K. Kearney, Robert Harvey, in London, Emily Chow, in Singapore, and Anushree Mukerjee, in Bengaluru. Thomas Derpinghaus edited by Conor Humphries and Mark Potter.

(source: Reuters)