Oil prices fall on hopes of Strait of Hormuz reopening

{"text":[[{"start":6.9,"text":"Oil prices are on track for their biggest monthly fall since 2020, as hopes rise that a deal between the US and Iran will lead to the reopening of the crucial Strait of Hormuz. "}],[{"start":18.35,"text":"The price of the international oil benchmark Brent crude has fallen almost 20 per cent in May, declining steadily over the past two weeks as signs have emerged that the two sides could be close to a deal. "}],[{"start":31.1,"text":"Brent was trading 2 per cent lower on Friday at $91.85 a barrel, a day after US officials said Washington was nearing a deal to extend the ceasefire with Iran and reopen the strait. "}],[{"start":44.7,"text":"The US President wrote on his Truth Social platform on Friday that he was making a “final determination” on the proposed deal."}],[{"start":52.150000000000006,"text":"Investors are “all watching” to see “when the ships start sailing”, said Michael Zigmont, co-head of trading at Visdom Investment Group. "}],[{"start":60.45,"text":"Zigmont added that oil prices “should fall steadily as the first tankers sail . . . and continue to fall as meaningful supply hits the market”. "}],[{"start":null,"text":"

"}],[{"start":69.5,"text":"Jordan Rochester, head of fixed income strategy for Europe, the Middle East and Africa at Mizuho, said that “the main thing that matters for us all is the tanker flows”, noting that the deal as currently drafted would allow traffic through the crucial shipping lane to steadily resume."}],[{"start":84.05,"text":"Iran brought the strait to a standstill in the early days of the conflict by threatening to fire on vessels, while the US imposed its own naval blockade in mid-April to prevent ships entering or leaving Iranian ports. Oil prices soared in response, while global stocks and bonds sold off sharply as investors anticipated an inflationary shock from energy shortages."}],[{"start":106.75,"text":"Under the latest proposed terms, Iran would gradually allow the strait to reopen and remove mines from the waterway. It would not charge ships a fee for the duration of the 60-day period, said people briefed on the talks."}],[{"start":119.55,"text":"Brent crude prices, which soared a record 63 per cent in the first month of the conflict, still remain more than 25 per cent above their prewar levels."}],[{"start":129.5,"text":"Government bonds have rallied as the oil price has declined, in a bet that the worst-case scenario for global inflation can be avoided if the strait reopens. "}],[{"start":139.4,"text":"The 10-year US Treasury yield is down 0.12 percentage points so far this week, at 4.45 per cent. The 10-year gilt yield is down 0.1 percentage point at 4.81 per cent. Bond yields fall as the price rises. "}],[{"start":157.35,"text":"“With oil prices coming down, investors have started to price out the more stagflationary outcomes for the global economy,” Deutsche Bank analysts wrote on Friday morning. "}],[{"start":null,"text":""}],[{"start":166.85,"text":"As the falling oil price has eased fears of inflation, investors have dialled back their bets on interest rate rises by the world’s major central banks this week. "}],[{"start":176.7,"text":"Traders in futures markets are now putting a roughly 50 per cent probability on the Federal Reserve raising interest rates before the end of 2026, while one week ago the market was fully pricing one quarter-point rise. "}],[{"start":191.2,"text":"In the Eurozone, while swaps traders are still pricing two quarter-point interest rate increases over the next year, the probability of a third rate rise has fallen sharply. "}],[{"start":201.1,"text":"Global stocks also rallied on Friday. Wall Street’s S&P 500 rose 0.2 per cent to another record high my early afternoon in New York, as an AI-driven rally continues to power the market. The Stoxx Europe 600 was up 0.9 per cent. "}],[{"start":217.04999999999998,"text":"However, with a deal yet to be finalised, a degree of scepticism remains among investors. "}],[{"start":223.04999999999998,"text":"“While reopening the strait is a necessary step towards normality in the global energy market, it alone isn’t sufficient to bring energy prices quickly back towards prewar levels,” said Kieran Tompkins, senior commodities economist at Capital Economics. "}],[{"start":237.49999999999997,"text":"While shorter-dated oil contracts have fallen with the latest deal news, contracts for longer-dated delivery of oil have changed less in recent trading sessions. "}],[{"start":247.94999999999996,"text":"Mizuho’s Rochester said the small moves in long-dated contracts were a reflection of the market’s “scepticism” and “headline fatigue”, as well as a sense of “damage already done for longer-term supply”. "}],[{"start":261.59999999999997,"text":"Rushabh Amin, a portfolio manager at Allspring Investments, said the constant “back and forth” in negotiations was prompting some traders to exit their oil positions altogether."}],[{"start":273.29999999999995,"text":"“[Investors] are tired of the jawboning,” he said. “Until you see concrete signs that something’s going to change, we just don’t know . . . it’s a coin flip.” "}],[{"start":289.75,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780132147_9628.mp3"}