WTI Crude Oil returns above $93.00 as concerns about the ceasefire grow

Finance

WTI Crude Oil returns above $93.00 as concerns about the ceasefire grow

Oil prices have trimmed some of the last two days losses, and the price of a barrel of the US benchmark West Texas Intermediate (WTI) returned to levels above $93.00 at the time of writing, from lows near $86.00 on Wednesday.

A fragile ceasefire remains in play, but Tehran has closed the Strait of Hormuz again in retaliation for Israels massive attack on Lebanon, which has been considered by Tehran a violation of the ceasefire agreement.

The US and Israel affirmed that operations against Hezbollah in Lebanon were not included in the deal, and US President Donald Trump warned of further action if Iran fails to comply with the terms of the deal.

Peace talks in Pakistan

The peace process, however, goes on as the US and Iran announced that they will send respective delegations for direct talks that will start in Pakistan on Saturday. This gives a glimpse of hope to investors and is keeping Oil prices from accelerating further.

Crude Oil prices have declined from March peaks but remain nearly 40% above pre-war levels. Markets remain cautious about a durable peace in an extremely volatile region and are beginning to accept that the full opening of the Strait of Hormuz might take some time, even if a peace deal were signed today.

Last weekend, the Organisation of the Petroleum Exporting Countries and allies (OPEC+) agreed to increase their output quotas by 206K barrels per day in May. This initiative, however, will be very difficult to put into practice with Hormuz closed and the limited supply capacity of Gulf countries, as some of their oilfields have suffered severe damage in the five weeks of war.