WASHINGTON (dpa-AFX) - Partially offsetting the losses from three consecutive sessions, crude oil prices have advanced on Friday as traders weigh increasing concerns of an impending crude oil inventory shortage due to the ongoing Strait of Hormuz blockade against the positive signals from U.S.-Iran peace talks.
WTI Crude Oil for July month delivery was last seen trading up by $0.10 (or 0.10%) at $96.45 per barrel.
As the U.S.-Iran war entered day number 84 today, the Strait of Hormuz that was shut by Iran immediately at the start of the conflict continues to remain blocked. Control of the critical chokepoint for Arabian oil trade has been taken over by Iran.
Iran has formed a new body, the Persian Gulf Strait Authority, tasked with vetting and tolling vessels in a bid to assert its dominance over the region. On May 20, the PGSA released a map outlining its zone of control.
The United Arab Emirates contested Iran's claims, stating that the area of control extended into the UAE's territorial waters.
Speaking at the GLOBSEC Forum in Prague, Presidential Adviser for the United Arab Emirates Anwar Gargash cautioned that the ongoing U.S.-Iran negotiations has only a fifty-fifty success rate with regard to the Strait of Hormuz.
Adding that Iran usually over-negotiates its position and misses diplomatic opportunities, Gargash warned against conducting talks only for the sake of reaching a ceasefire as it could lead to new undesirable conflicts later.
Yesterday, Executive Director of the International Energy Agency Fatih Birol warned that the continuous drawdown of existing inventories since the blockade on the Strait of Hormuz has cut short oil supply from the Arabian nations could push oil markets into a 'red zone' by early July.
Earlier in April, Birol stated that the world is facing the biggest energy crisis in history.
On the diplomatic front, acting as an intermediary, Pakistan has stepped up its efforts in facilitating the exchange of messages between the U.S. and Iran and sharing draft proposals.
Pakistan's Interior Minister Syed Mohsin Naqvi is already in Iran where he has already met Iranian Foreign Minister twice. Earlier, Naqvi had discussions with Iran's President Masoud Pezeshkian. Pakistan's Army Chief Asim Munir has also arrived in Iran to meet senior Iranian officials.
CBS News reported (quoting a senior official) that Munir is joining the efforts since Naqvi's meetings enabled the negotiations to progress 'in an important direction.'
Citing sources with knowledge on the matter, Reuters reported that aside from Pakistan's ongoing mediation, a separate team of negotiators from Qatar arrived in Iran today in coordination with the U.S. for securing a peace deal soon.
U.S. Secretary of State Marco Rubio noted that the discussions are showing 'some progress' but admitted he did not want to sound overly optimistic.
Yesterday, citing a senior Iranian official, Reuters reported that the gaps between both the nations have been considerably reduced.
Saudi Arabia's Al Arabiya reported that an announcement on U.S.-Iran agreement to end the war could come soon and published what it claimed a final draft. At the outset, it appears to be an interim agreement to halt the war immediately and reopen the Strait of Hormuz with other outstanding issues to be negotiated after it comes into force.
Over the weekend, energy experts will closely watch for the possibilities of a peace deal between the U.S. and Iran, which could lead to a reopening of the Strait of Hormuz and thereby normalize crude oil prices.
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