WTI struggles above $76 on hopes of de-escalating Mideast conflict

West Texas Intermediate futures on NYMEX are up 2% to near $76.00 during the European trading session on Thursday. The WTI crude oil trades firmly, but struggles to stabilise above the $76.00 hurdle due to signs of de-escalation in conflicts between the United States, Israel and Iran.

The oil price had rallied significantly in the past few trading days as heightened military activities near the Strait of Hormuz due to the ongoing war dampened the overall supply mechanism.

Hopes of de-escalation in Middle East conflicts have been invoked by a report from Sky News Arabia claiming that Iran is willing to abandon its ambitions of building nuclear infrastructure if Washington offers a rewarding offer.

“Iran is ready to abandon its nuclear programme on the condition that the US presents a rewarding alternative offer,” Iran’s Deputy Foreign Minister Saeed Khatibzadeh said, Sky News Arabia reported.

The initial reaction to the oil price after the news flash was negative, while it has recovered those losses and is holding onto intraday gains.

Meanwhile, rising energy prices due to oil supply disruption have prompted fears of high inflation across the globe, a scenario that will likely discourage central banks from easing their monetary policy conditions. Such a scenario is theoretically unfavourable for the oil price.

(Source: OANDA)