Oil prices recovered in the latest trading session as the market continued to closely monitor the negotiation process between the US and Iran regarding the reopening of the Strait of Hormuz - the world's strategic energy transport route.
Brent oil rose again above the 96 USD/barrel mark after falling more than 7% in the first session of the week. Meanwhile, US WTI oil traded around the 92 USD/barrel mark.
The latest oil price developments appeared after the US Central Command (CENTCOM) said that US forces had conducted airstrikes targeting several missile launchers and ships suspected of deploying naval mines near the Strait of Hormuz.
US Secretary of State Marco Rubio said that negotiations between Washington and Tehran are still ongoing and may take a few more days for the two sides to finalize the contents of the initial draft agreement.
Previously, US President Donald Trump said that the dialogue process with Iran was "running smoothly", thereby helping the market expect the Hormuz Strait to be reopened soon, pulling oil prices down sharply in the first session of the week.
However, analysts believe that there are still many issues that need to be addressed before an official agreement is approved.
Currently, Washington and Tehran are discussing the possibility of extending the ceasefire for about two more months, in exchange for the US loosening the blockade and Iran reopening the Strait of Hormuz.
However, the parties have not yet reached a consensus on the right to manage and control maritime activities in this area.
Mr. Saul Kavonic - Senior Energy Analyst at MST Marquee - said that the market is still maintaining a cautious mentality because previous negotiations have repeatedly signaled positive signs but have not yielded final results.
In the context that the Strait of Hormuz has not yet returned to normal operation, global energy supplies continue to be under certain pressure. According to the International Energy Agency (IEA), world oil inventories are decreasing at a faster rate recently.
This also makes the market particularly interested in US oil reserves as both commercial and strategic reserves recorded a downward trend.
High energy prices are continuing to put pressure on global inflation and affect the prospects of monetary policy management of many major central banks.
Member of the European Central Bank (ECB) Board of Directors Isabel Schnabel said that the ECB may still have to maintain a cautious stance on interest rates even as the Middle East situation gradually cools down.
In related developments, President Donald Trump said that the US is still closely following Iran's nuclear program and continues to promote diplomatic solutions to reduce tensions in the region.
Meanwhile, the situation in Lebanon is also being closely monitored after Israel announced an increase in military activities targeting Iranian-backed Hezbollah forces.
Investors currently expect US-Iran negotiations to continue to make further progress in the near future, thereby contributing to stabilizing the global energy market.
