Oil heading toward 70 dollars, but agreement remains fragile

Tensions between the US and Iran are rising again, but the oil market is not getting nervous about it. Brent oil continues to fall because of the greater supply now that the Strait of Hormuz is again largely accessible. At the time of writing (Tuesday afternoon, 30 June), oil stands at $73.33 per barrel. That is a decrease of 4.9% compared with last Tuesday, when Brent oil closed at $77.08 per barrel. Since the temporary agreement was reached, a little under two weeks ago on 17 June, prices have fallen by 7.8%. A possible agreement had already been priced in at the time. At the beginning of this month, two weeks before the interim deal, oil was still at $97.81 per barrel. The diesel price initially fell as well, but is now slightly higher than last week. Last Tuesday (23 June), diesel cost €148.54 per 100 liters from 4,000 liters (LTO members' price). On 30 June that is €151.16 per 100 liters. The diesel price has been fairly stable since Friday. Compared with 8 June, there is a price decrease of 7.8%. The interim agreement between the US and Iran, signed only recently, wavered after attacks back and forth. Last Thursday, Iran attacked a cargo ship that wanted to sail past Oman instead of Iran in the Strait of Hormuz. In response, the Americans carried out attacks on Iran and that country in turn on American targets in Kuwait and Bahrain. Iran also still plans to start charging tolls in the strait with Oman after a final agreement. There will be talks in Doha in the coming days between the Americans and mediators, but reportedly no Iranian representatives will be present there. All in all, the agreement remains surrounded by uncertainty. This has little effect on the oil price. It is falling because of the increased availability. Oil and LNG tankers can again leave the Strait of Hormuz fully loaded. The US has also temporarily lifted sanctions on Iranian oil, allowing it to enter the market as well. Gas price does rise The gas price does seem to be reacting to the breaches of the interim agreement and has been rising since last Thursday. Then the price was €40.40 per MWh and at the time of writing it is €43.47. ElectricityEpex Spot saw a spike last Wednesday, 24 June, with an average of €227.99 per MWh. The lowest average was €83.80 on 28 June.