NEW YORK: Oil prices whipsawed in a volatile trading session on Thursday, trading lower on uncertain prospects for a resolution in the US-Israeli war with Iran.
Brent crude futures lost USD2.80, or 2.7 percent, to USD102.22 a barrel at 1:57 p.m. ET (1757 GMT). US West Texas Intermediate futures shed USD2.45, or 2.5 percent, to USD95.81 a barrel.
Earlier in the day, oil prices swelled by 3 percent after Reuters reported that Iran’s supreme leader issued a directive that dented hopes for a swift resolution to the war. The Reuters report about that directive, which cited two senior Iranian sources, signaled that Tehran is hardening its stance on a key US demand.
READ MORE: Oil prices gain 3% after Reuters report signals complication to US-Iran peace talks
The directive from Ayatollah Mojtaba Khamenei could further complicate negotiations and frustrate US President Donald Trump’s efforts to broker an end to the war. The development came a day after Iran announced a new “Persian Gulf Strait Authority,” which would oversee a “controlled maritime zone” in the Strait of Hormuz. Prices were volatile. Gains accelerated after US Secretary of State Marco Rubio said a proposed tolling system in the strait would make a diplomatic deal unfeasible.
Prices pared gains later after he added that officials from Pakistan, which is acting as a mediator, will travel to Iran for talks. “We’ve been in this situation multiple times before, which ultimately led to disappointment,” ING analysts said in a note on Thursday, forecasting an average Brent price of USD104 a barrel in the current quarter. Separately, UBS raised its oil price forecasts by USD10 a barrel on Thursday, projecting Brent crude at USD105 a barrel and WTI crude at USD97 in September.
Iran warned against further attacks and unveiled steps entrenching its control of the strait, which remains mostly closed. Before the war, the strait carried oil and liquefied natural gas shipments equal to about 20 percent of global consumption.
Economic activity in the euro zone shrank at its sharpest rate in more than 2-1/2 years in May as a war-driven surge in living costs hammered demand for services across Europe and firms accelerated layoffs, surveys showed on Thursday. Seven leading OPEC+ oil-producing countries will likely agree to a modest hike in July output when they meet on June 7, Reuters reported on Thursday, citing four sources.
Typically, output decisions from the group would move markets, but that was not the case during Thursday’s session, as supply disruptions linked to the Iran war continue to affect deliveries from several producers.
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