Oil Prices jump after failure of US-Iran peace talks
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Oil prices jumped on 11 May after the United States and Iran failed to reach an agreement on a peace proposal while the Strait of Hormuz is still closed which kept pressure on global energy supplies.
Investors are now watching closely to see what is next for oil prices and the wider global energy market as geopolitical tensions rise and markets react to every update from Washington or Tehran.
Oil prices surged by $3 a barrel on Monday as the United States and Iran failed to agree to a peace βproposal while the Strait of Hormuz is βclosed which has kept global energy supplies tight.Β
This is basically a result of concerns over prolonged disrupted oil flows.Β
Brent crude futures increased by $3.18 or 3.14% to reach $104.47 a barrel. This move added to the 1.23% rise recorded on Friday.
U.S. West Texas Intermediate was up 3.24% at $98.51 a barrel after having settled β0.64% higher in the previous session.
Expectations for a quick end to the Ten-week-old U.S.-Iran conflict weakened after President Donald Trump rejected Iranβs response to a U.S. peace proposal on Sunday. Trump said on social media on Sunday evening that Iranβs response to the U.S. proposal was "totally unacceptable".
Trump did not reveal the details of Iranβs reply but has repeatedly warned that failure to reach a deal soon could result in renewed military escalation.
Trump is expected to arrive in Beijing on Wednesday where U.S. officials said he will discuss Iran and other issues with Chinese President Xi Jinping.
American allies in the region have also made it clear that Iranian control over the Strait or any form of toll system would not be accepted under any outcome.
There is still hope that Trump can convince Beijing to use its influence over Iran to support a full ceasefire and help resolve the disruption in the Strait of Hormuz.
Saudi Aramco CEO Amin Nasser said on Sunday that the world has lost about 1 billion barrels of oil during the past two months. He also said energy markets will need time to stabilise even if oil flows resume through the Strait of Hormuz.
The oil market basically for a while has traded like a geopolitical headline βmachine because prices move up and down based on every comment or warning from either Washington or Tehran.
Investors are now focused on whether diplomatic talks between the United States and Iran with the China dynamic can reduce tensions and restore stability to global energy supplies.
(Source: Reuters)
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