US President Donald Trump declared the ceasefire with Iran ended on July 10, yet international oil prices closed lower. On the New York Mercantile Exchange, West Texas Intermediate (WTI) crude for August delivery fell $0.67 (0.93%) to $71.41 per barrel, while Brent crude for September delivery dropped $0.29 (0.38%) to $76.01 per barrel. Markets appeared to prioritize the continuation of US-Iran negotiations over escalation risks, despite heightened tensions surrounding the Hormuz Strait.
WTI and Brent Crude Post Declines on July 10
On July 10 (US Eastern time), WTI crude for August delivery closed at $71.41 per barrel, down $0.67 (0.93%) from the previous session. Brent crude for September delivery finished at $76.01 per barrel, declining $0.29 (0.38%). The declines occurred despite geopolitical developments that initially pushed prices higher during the trading session.
Trump Announces Ceasefire End, Markets Reverse Initial Gains
Trump stated on his Truth Social account on July 10 that Iran had requested to continue negotiations. He wrote that the US agreed but made it clear to Iran that the ceasefire was over. Following Trump's statement, oil prices briefly surged as much as 1.50% on concerns about potential full-scale conflict affecting the Hormuz Strait. However, prices reversed direction and moved lower as US stock indices rebounded sharply. Market participants focused on the fact that both the US and Iran agreed to continue negotiations, suggesting both sides view full-scale war as burdensome.
Analysts Cite Hormuz Strait Disruptions as Price Floor
Giovanni Staunovo, analyst at UBS, stated that the US not launching additional attacks on Iran overnight appeared to be putting downward pressure on oil prices, but noted that reduced flow through the Hormuz Strait was limiting the downside. Vandana Hari, analyst at Vanda Insights, said that while prices declined from mid-week highs, Hormuz Strait traffic remains nearly halted with no clear signals on when normal operations will resume, indicating a substantial risk premium still exists. The International Energy Agency (IEA) stated that its forecast of significant oil market oversupply could be overturned due to the recent military conflict between the US and Iran.
FAQ
What happened to oil prices on July 10 after Trump's Iran statement?
WTI crude for August delivery fell $0.67 (0.93%) to $71.41 per barrel, and Brent crude for September delivery dropped $0.29 (0.38%) to $76.01 per barrel on July 10, despite Trump declaring the ceasefire with Iran ended. Prices initially surged 1.50% after Trump's statement but reversed as markets focused on continued US-Iran negotiations.
Why did oil prices fall despite increased US-Iran tensions?
Markets prioritized the fact that both the US and Iran agreed to continue negotiations, suggesting both sides view full-scale conflict as burdensome. The rebound in US stock indices also contributed to oil prices turning lower after the initial spike following Trump's ceasefire announcement.
What impact is the Hormuz Strait situation having on oil prices?
Analysts report that Hormuz Strait traffic remains nearly halted with no clear timeline for normal operations to resume. UBS analyst Giovanni Staunovo stated that reduced flow through the strait is limiting downside price pressure, while Vanda Insights analyst Vandana Hari noted a substantial risk premium remains in prices due to the disruption.
