Oil prices settle lower as US sanctions ease fears of escalation in Iran
[HOUSTON] Oil prices settled down on Friday (Jun 20) as the US imposed new Iran-related sanctions, marking a diplomatic approach that fed hopes of a negotiated agreement, a day after US President Donald Trump said he might take two weeks to decide US involvement in the Israel-Iran conflict.
Brent crude futures settled down US$1.84, or 2.33 per cent, to US$77.01 a barrel.
US West Texas Intermediate crude for July, which did not settle on Thursday as it was a US holiday and expires on Friday, was down 21 US cents, or 0.28 per cent, at US$74.93.
The more liquid August contract settled at US$73.84.
Brent rose 3.6 per cent on the week, while front-month US crude futures increased 2.7 per cent. The Trump administration issued fresh Iran-related sanctions, including on two entities based in Hong Kong, and counter-terrorism-related sanctions, according to a notice posted to the US Treasury Department website.
The sanctions target at least 20 entities, five individuals and three vessels, according to the Treasury's Office of Foreign Asset Control.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
'Those sanctions are cutting both ways. They may be part of a broader negotiation approach towards Iran. The fact that they are undertaking this is a signal that they are trying to resolve this outside of conflict,' said John Kilduff, partner at Again Capital in New York.
Oil prices jumped almost 3 per cent on Thursday after Israel bombed nuclear targets in Iran, while Iran, Opec's third-largest producer, fired missiles and drones at Israel. Neither side showed any sign of backing down in the week-old war. Brent prices retreated after the White House said Trump would decide whether the United States would get involved in the Israel-Iran conflict in the next two weeks.
'Although a major escalation is yet to occur, risks to supply from the region remain high, still hinging upon the potential for US involvement,' said Russell Shor, senior market analyst at Tradu.com. Israel's UN ambassador said Israel seeks genuine efforts on Iran's nuclear capabilities from Friday's meeting between European and Iranian ministers, not just another round of talks.
'However, while Israel and Iran carry on pounding away at each other, there can always be an unintended action that escalates the conflict and touches upon oil infrastructure,' PVM analyst John Evans said.
Iran in the past has threatened to close the Strait of Hormuz, a vital route for Middle East oil exports.
Oil exports so far have not been disrupted and there is no shortage of supply, said Giovanni Staunovo, an analyst at UBS.
'The direction of oil prices from here will depend on whether there are supply disruptions,' he said.
An escalation of the conflict in such a way that Israel attacks export infrastructure or Iran disrupts shipping through the strait could lead to oil at US$100 a barrel being a reality, said Panmure Liberum analyst Ashley Kelty.
Elsewhere, the EU has abandoned its proposal to lower the price cap on Russian oil to US$45, Bloomberg reported. US energy firms this week cut the number of oil and natural gas rigs operating for an eighth week in a row for the first time since September 2023, energy services firm Baker Hughes said in its closely followed report.
The oil and gas rig count, an early indicator of future output, fell by one to 554 in the week to Jun 20, the lowest since November 2021. REUTERS
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
AsiaOne
28 minutes ago
- AsiaOne
Trump disavows spy chief Gabbard's take on Iran's nuclear program, World News
WASHINGTON - US President Donald Trump said on Friday (June 20) that his Director of National Intelligence, Tulsi Gabbard, was wrong in suggesting there is no evidence Iran is building a nuclear weapon. Trump contested intelligence assessments relayed earlier this year by his spy chief that Tehran was not working on a nuclear weapon when he spoke with reporters at an airport in Morristown, New Jersey. "She's wrong," Trump said. Gabbard testified to Congress in March that the US intelligence community continued to judge that Tehran was not working on a nuclear warhead. Trump's comments came as the president has said he would weigh involvement in the Iran-Israel conflict over the next two weeks. Israeli Prime Minister Benjamin Netanyahu has justified a week of airstrikes on Iranian nuclear and military targets by saying Tehran was on the verge of having a warhead. Gabbard's office has previously pointed to quotes from the spy chief saying that she and Trump were "on the same page" regarding the status of Iran's nuclear programme. Iran denies developing nuclear weapons, saying its uranium enrichment programme was only for peaceful purposes. A source with access to US intelligence reports told Reuters that the assessment presented by Gabbard had not changed. They said US spy services also judged that it would take up to three years for Iran to build a warhead with which it could hit a target of its choice. Some experts, however, believe it could take Iran a much shorter time to build and deliver an untested crude nuclear device, although there would be no guarantee it would work. [[nid:719150]] Trump has frequently disavowed the findings of US intelligence agencies, which he and his supporters have charged - without providing proof - are part of a "deep state" cabal of US officials opposed to his presidency. The Republican president repeatedly clashed with US spy agencies during his first term, including over an assessment that Moscow worked to sway the 2016 presidential vote in his favour and his acceptance of Russian President Vladimir Putin's denials. Gabbard, a fierce Trump loyalist, has been among the president's backers who have aired such allegations.
Business Times
30 minutes ago
- Business Times
Trump says he may change his mind about firing Fed chair Powell
[WASHINGTON] US President Donald Trump on Friday (Jun 20) again floated the idea of firing Jerome Powell, the Federal Reserve chair he has long attacked over interest rates he wants lowered. 'I don't know why the Board doesn't override (Powell),' Trump wrote in a lengthy post on Truth Social criticising Fed policy. 'Maybe, just maybe, I will have to change my mind about firing him? But regardless, his Term ends shortly.' Trump added: 'I fully understand that my strong criticism of him makes it more difficult for him to do what he should be doing, lowering Rates, but I have tried it all different ways.' Fed chairs have long been seen as insulated from presidential dismissal for reasons other than malfeasance or misconduct, but Trump has threatened to test that legal premise with frequent threats to fire Powell. Trump nearly as frequently reverses course on those threats. 'I'm not going to fire him,' he said at the White House on Jun 12. The Fed held rates steady on Wednesday in the 4.25 to 4.5 per cent range and forecast slower growth as well as higher unemployment and inflation by year's end. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Fed governor Chris Waller, who has been floated as a possible Trump pick to be Powell's successor, said on Friday that with inflation coming down and the labour market showing signs of weakening, rate cuts should be considered as soon as July. But even Waller joined Wednesday's unanimous Fed decision to leave rates on hold, signalling no inclination by any of Powell's six fellow Board members, or of the five voting regional Fed bank presidents, to 'override' him. Fed decisions are typically reached through consensus, and more than a couple of dissents would be rare. Elected partly on voters' belief that he could contain high inflation, the Republican US president has imposed tariff hikes in office. Powell, echoing an academic consensus, has said some of those tariff hikes will be paid for in higher consumer prices. Powell's term ends in May 2026, and Trump is expected to nominate a successor in the coming months. A Supreme Court ruling in May eased concerns that Trump could fire Powell as the justices called the Fed 'a uniquely structured, quasi-private entity.' REUTERS
AsiaOne
an hour ago
- AsiaOne
Hundreds of US citizens left Iran in last week, State Dept cable says, World News
WASHINGTON - Hundreds of American citizens have departed Iran using land routes over the past week since an aerial war between the Islamic Republic and Israel broke out, according to an internal State Department cable seen by Reuters on Friday (June 20). While many left without problem, "numerous" citizens had faced "delays and harassment" while trying to exit, the cable said. It said, without giving further details, that one unidentified family had reported that two US citizens attempting to leave Iran had been detained. The internal cable dated June 20 underscores the challenge Washington is facing in trying to protect and assist its citizens in a country with which it has no diplomatic relations and in a war in which the United States may soon get involved. The State Department did not immediately respond to a request for comment. The cable was first reported by The Washington Post. President Donald Trump and the White House said on Thursday he will decide in the next two weeks whether the US will get involved in the Israel-Iran war. Trump has kept the world guessing on his plans, veering from proposing a swift diplomatic solution to suggesting Washington might join the fighting on Israel's side. The air war began on June 13 when Israel attacked Iran and has alarmed a region that has been on edge since the start of Israel's war in Gaza in October 2023. Israel is the only country in the Middle East widely believed to have nuclear weapons, and said it struck Iran to prevent Tehran from developing its own nuclear weapons. Iran, which says its nuclear programme is peaceful, has retaliated with its own strikes on Israel. Iran is a party to the Nuclear Non-Proliferation Treaty, while Israel is not. Potential evacuation The US State Department in a travel alert earlier on Friday urged its citizens wishing to depart Iran to use land routes via Azerbaijan, Armenia or Turkey. Iranian airspace is closed. [[nid:719150]] The US Embassy in the Turkmenistan capital of Ashgabat has requested entry for over 100 American citizens, but the Turkmenistan government has yet to give its approval, the cable said. The Islamic Republic treats Iranian-US dual citizens solely as nationals of Iran, the State Department emphasised. "US nationals are at significant risk of questioning, arrest and detention in Iran," the alert said. Washington is looking at ways to potentially evacuate its citizens from Israel, but it has almost no way of assisting Americans inside Iran. The two countries have had no diplomatic ties since the Iranian Revolution in 1979. US Ambassador to Israel Mike Huckabee on Thursday said the administration was looking at different ways to get US citizens out. "We're working to get military, commercial, charter flights and cruise ships for evac," he said in an X post, urging US citizens and green card holders to complete an online form. As of Friday, more than 6,400 US citizens filled out that form for Israel, a separate internal department email seen by Reuters said. The form allows the agency to predict an approximate figure for potential evacuations. "Approximately 300-500 US citizens per day would potentially require departure assistance," said the internal email, also dated June 20 and marked "sensitive". The State Department does not have official figures but thousands of US citizens are thought to be residing in Iran and hundreds of thousands in Israel. Israel's strikes over the last week have killed 639 people in Iran, according to the Human Rights Activists News Agency. Israel says Iranian attacks have killed 24 civilians in Israel. "The US Department of State received no reports of US citizen casualties in Israel or Iran," the second email said.
