Key Moments
- WTI crude traded near $75.60 in European hours on Wednesday. The market showed little direction.
- Traders priced in a possible US-Iran interim deal. However, uncertainty around Hormuz traffic limited downside.
- Middle East crude benchmarks weakened. In addition, several grades moved into contango.
WTI Stays Under Pressure as Supply Outlook Shifts
West Texas Intermediate (WTI) crude stayed under pressure for a fifth session. Prices hovered near $75.60 per barrel in European trade.
Markets reacted to expectations of a US-Iran interim agreement. As a result, traders reduced the geopolitical risk premium.
However, losses did not deepen further. Uncertainty over shipping routes in the Strait of Hormuz supported prices.
US-Iran Deal Shapes Supply Expectations
The US and Iran are expected to sign an interim deal in Switzerland this Friday. The agreement would unlock Iranian oil exports.
Iranian supply could return quickly once the deal takes effect. Therefore, traders adjusted near-term supply expectations.
Early shipping data showed some movement of Iranian crude. In addition, a few tankers resumed regional transit.
Strait of Hormuz Remains a Key Risk Factor
Despite diplomatic progress, full normalization has not occurred. Shipping flows through Hormuz remain below pre-crisis levels.
Meanwhile, markets continue to price partial risk. Therefore, a full risk premium removal has not happened yet.
Middle East Benchmarks Move Into Contango
Regional crude benchmarks weakened further this week. The structure of the market also shifted.
Dubai crude slipped into a discount of 46 cents. This marked its first contango since January.
Oman and Murban grades also turned negative. In addition, both traded at wider discounts.
This structure signals more near-term supply. As a result, traders see looser physical conditions.
| Benchmark | Market Structure | Change |
|---|---|---|
| Dubai | Discount of 46 cents | First contango since January |
| Oman | Discount of 67 cents | Shifted into negative territory |
| Murban | Discount of 49 cents | Weakened further vs swaps |
WTI Market Context
WTI is a key global crude benchmark. It reflects supply and demand in the US and global markets.
Prices respond quickly to geopolitical risk. However, they also react to inventory and OPEC policy shifts.
Therefore, traders continue to monitor both political and physical supply signals closely.
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