Israel-Iran Tensions Ease, Oil Prices Drop to US$93.64
Global oil prices weakened during Tuesday morning trading as market participants monitored recent developments in the Middle East. The easing of direct attacks between Iran and Israel has reduced some of the geopolitical risk premiums that had driven energy prices higher in recent months.
According to Refinitiv data at 09:15 WIB, Brent crude stood at US$93.64 per barrel, down 0.65% from the previous close. Meanwhile, West Texas Intermediate (WTI) crude corrected by 0.70% to US$90.66 per barrel. This decline follows the previous day’s close, where Brent ended at US$94.25 per barrel and WTI at US$91.30 per barrel.
Despite this morning’s decline, oil prices remain well above late May levels. Brent has increased by approximately 1.7% compared to its position on 29 May at US$92.05 per barrel, while WTI is up nearly 3.8% from US$87.36 per barrel during the same period. The price surge over recent weeks was driven by global supply disruptions after the Iran conflict triggered obstacles to energy shipments through the Strait of Hormuz.
Recent sentiment stems from statements from Iran and Israel indicating a temporary cessation of attacks following calls from US President Donald Trump. Previously, the market was shocked by a series of retaliatory strikes between the two nations, which pushed oil prices up by 5% in a single trading session. However, market fears began to subside after Iran stated the initial wave of attacks had ended and Israel also decided to temporarily halt military operations.
Nevertheless, supply risks have not entirely disappeared. Iran continues to limit much of the shipping activity in the Strait of Hormuz, a route that, prior to the war, accounted for approximately one-fifth of global crude oil and LNG trade. This situation leaves energy markets alert to the possibility of distribution disruptions should tensions escalate again.
On the other hand, energy demand in Asia is beginning to recover. Kpler data, cited by Reuters, estimates that Asian LNG imports will reach 21.83 million tonnes in June, the highest in five months. China, the world’s largest LNG buyer, has increased purchases after previously reducing imports due to the post-war price surge. China’s LNG imports are expected to reach 4.48 million tonnes in June, significantly higher than the eight-year low of 3.63 million tonnes recorded in April.
Japan has also increased LNG purchases, with June imports projected to reach 5.33 million tonnes, the highest in three months. The recovery in energy consumption in these two major Asian economies provides support for global oil and gas demand prospects. The combination of easing military escalation and recovering Asian energy needs now serves as the two primary factors shaping the direction of global oil prices in the short term.