Oil prices climbed again on Friday after falling for three consecutive sessions, as investors assessed conflicting signals around ongoing Iran peace negotiations.
Although recent comments from the U.S. suggested that a deal could be close, reports indicating that Iran wants to retain its enriched uranium domestically have renewed concerns that the conflict may drag on, prolonging disruptions to oil supplies.
Crude oil price on May 22
Brent crude futures for July delivery rose 1.9% to $104.52 a barrel in early Asian trade, while U.S. West Texas Intermediate crude for June gained 1.5% to $97.81 per barrel.
According to Reuters, Iran’s Supreme Leader Ayatollah Mojtaba Khamenei has directed that the country’s near-weapons-grade uranium should not be transferred abroad. The report, citing Iranian sources, came shortly after U.S. President Donald Trump said Washington was in the “final stages” of negotiations with Iran, according to a pool report.
Supply concerns also remained in focus after the International Energy Agency warned that oil markets could soon enter a “red zone” as summer travel demand rises and global inventories continue to shrink.
IEA Executive Director Fatih Birol said the full and unconditional reopening of the Strait of Hormuz would be the most important step in easing the energy shock caused by the Iran war. He added that developing economies in Asia and Africa are likely to suffer the “biggest pain of this crisis.”
The Iran war, which began in late February, has severely affected traffic through the Strait of Hormuz, a key route that previously handled nearly a fifth of global oil and liquefied natural gas flows.
Echoing the same view as IEA director, Morgan Stanley suggests that the oil market is in “a race against time,” warning that the factors keeping crude prices from rising further may fade if the Strait of Hormuz remains shut into June.
Morgan Stanley also said higher U.S. crude exports and softer Chinese imports have helped cushion the market from a deeper supply shock so far. However, the brokerage warned that a prolonged closure of Hormuz could once again tighten global supplies if disruptions continue beyond what China or the United States can absorb comfortably.
Haitong Futures said markets remain cautious and warned that the ceasefire may not hold for long. The brokerage added that stalled negotiations between Washington and Tehran could trigger another round of escalation and push oil prices even higher.
Earlier this month, Saudi Aramco CEO Amin Nasser said that disruptions to shipments through Hormuz could delay stability returning to oil markets until 2027, with around 100 million barrels of oil supply per week potentially affected. Aramco is the world’s largest oil-producing company.
The U.S.-Israeli conflict with Iran has effectively shut the Strait of Hormuz, a route that normally handles around one-fifth of global oil supplies. To offset supply shortages caused by the conflict, countries have increasingly turned to commercial and strategic oil reserves.
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