Oil prices edged lower in volatile trading on Tuesday as investors weighed the latest threats from U.S. President Donald Trump to resume strikes against Iran. Since a ceasefire was reached in early April, Trump has repeatedly issued military strike threats, none of which have been carried out so far.
WTI crude fell to around $104 per barrel. Trump stated on Tuesday that if Iran does not agree to U.S. peace terms, "we may have to hit them hard again." This came less than a day after he claimed to have just canceled a planned strike operation. For traders who have endured 12 weeks of market turbulence driven by the war, this scenario is familiar, leading many to refrain from increasing long positions without more concrete evidence that hostilities will resume.
Reports that NATO is discussing the possibility of assisting vessels through the Strait of Hormuz if it remains closed by early July further pressured oil prices.
According to a Goldman Sachs survey earlier this month, investors are increasingly pricing in the scenario of the Strait of Hormuz remaining closed beyond July. This implies that a NATO-led effort to guide ships through this critical chokepoint could restore supply more quickly than anticipated.
Meanwhile, despite declining domestic inventories, White House officials remain firmly opposed to restricting oil exports.
At the close, the July WTI contract in New York fell 23 cents to settle at $104.15 per barrel.
The June contract expired on Tuesday, trading less actively than the July contract.
The July Brent crude contract declined 82 cents to settle at $111.28 per barrel.
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