Crude oil prices started the week higher after President Donald Trump rejected Iran’s peace proposal, raising concerns that the conflict could continue and disrupt global oil trade.
At the time of writing, Brent crude was trading at $107.8 per barrel, while West Texas Intermediate (WTI) stood at $95.46.
WTI was also pressured by reports that the US federal government could introduce a temporary ban on diesel exports. Such a measure could force refiners to reduce processing rates, potentially increasing crude oil availability in the market.
However, reports of improving oil flows from the Persian Gulf failed to ease broader supply concerns. The development would normally weigh on prices by signalling a gradual recovery in regional trade, but fears of a prolonged conflict are currently dominating market sentiment.
The Wall Street Journal reported that Trump was considering resuming military strikes against Iran after the November midterm elections, raising the prospect of an extended conflict and prolonged disruption to normal oil flows.
The US and Iran also remain divided over the conditions for a ceasefire and the reopening of the Strait of Hormuz.
Iran has linked any agreement to the lifting of the US naval blockade and oil sanctions, as well as the unfreezing of Iranian funds. Washington, meanwhile, has maintained economic and military pressure on Tehran.
Further uncertainty stems from changes in Trump’s public position on the conflict. Earlier this month, he said he expected the war to end shortly after the November midterms. Subsequent reports, however, indicated that he could order renewed strikes against Iran.
According to officials cited by the Wall Street Journal, the outcome of the US midterm elections could also influence Washington’s approach to the conflict.
SOURCE: Businessday