Oil prices rise past US$108 as US-Iran peace talks stall
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Last week, Brent and WTI surged nearly 17 per cent and 13 per cent, respectively, the biggest weekly gains since the start of the Iran war.
PHOTO: REUTERS
SINGAPORE - Oil prices extended gains on April 27 as peace talks between the United States and Iran stalled, with the Strait of Hormuz remaining virtually impassable.
Brent crude, the global oil benchmark, surged 2.8 per cent to US$108.30 a barrel as at 4.23pm Singapore time. The US benchmark, West Texas Intermediate (WTI), was up 2.6 per cent to US$96.86.
Last week, Brent and WTI surged nearly 17 per cent and 13 per cent respectively, the biggest weekly gains since the start of the Iran war.
Hopes of reviving peace efforts receded during the weekend when US President Donald Trump scrapped a planned trip to Islamabad by his envoys Steve Witkoff and Jared Kushner, even as Iranian Foreign Minister Abbas Araghchi arrived in Pakistan.
A ceasefire has mostly held in place since early April, but a blockade of the Strait of Hormuz by both the US and Iran has cut daily transits through the key waterway to near zero. The conflict has choked off supplies of crude, fuel, natural gas and fertilisers, raising concerns about an inflation crisis.
“The Strait is still very much under siege, with traffic halted,” said Ms Mona Yacoubian, director of the Middle East Programme at the Center for Strategic and International Studies. “It seems like neither side wants to go back to outright conflict. We’re in this purgatory, where it’s just stalemated.”
“Consolidation above US$100 is the area that we’re heading” towards, said Mr Robert Yawger, director of energy futures at Mizuho Securities. “As every day ticks forward, there’s less and less chance that we’ll see a deal any time soon.”
The longer the Strait of Hormuz is closed, the more oil consumption is going to have to recalibrate lower to align with the supply that has dropped at least 10 per cent, according to traders. A loss of one billion barrels is already all but guaranteed – more than double the emergency inventories that governments released after the conflict, with demand destruction likely to spread.
Goldman Sachs raised its oil price forecasts for the fourth quarter of 2026 to US$90 a barrel for Brent crude and US$83 for WTI, citing reduced output from the Middle East.
“The economic risks are larger than our crude base case alone suggests because of the net upside risks to oil prices, unusually high refined product prices, product shortages risks and the unprecedented scale of the shock,” Goldman analysts said in an April 26 note. BLOOMBERG, REUTERS
