Meanwhile, European airports brace for impending fuel shortages: File Image/Pixabay

 

Despite a shaky U.S./Iran ceasefire that did nothing to unblock the Strait of Hormuz, oil traders on Friday maintained a degree of hope that this weekend’s talks between the two countries would lead to some form of resolution - and two key benchmarks settled lower, accordingly.

Brent for June delivery fell 0.8 percent to $95.20 per barrel, and West Texas Intermediate dropped 1.3 percent to $96.57.

Although Iranian delegates on Friday arrived in Pakistan ahead of the talks, there remained confusion if discussions would even take place, with some Iran news outlets claiming they wouldn’t happen unless Israel stopped its attacks on Lebanon.

For the record, Lebanese and Israeli officials will meet in Washington next week to discuss a ceasefire.

As for the Hormuz, maritime intelligence firm Windward stated in a note, “Transit through the Strait of Hormuz remains restricted, coordinated, and selectively enforced; there has been no return to open commercial navigation... Standard shipping lanes remain largely unused, and no meaningful increase in traffic has followed the ceasefire announcement.”

Windward added, “Recovery will depend not on declarations, but on sustained, observable change in transit behavior, enforcement, and risk conditions.”

Wood Mackenzie pointed out that even if the Hormuz was fully unblocked today, the Middle East will endure several months of oil and gas supply recovery.

Also on Friday, data compiled by Platts showed  a massive gap between dated Brent (considered the real-world price of crude oil) and front-month Brent futures, indicating supplies will remain tight for longer; dated Brent’s spot price was $131.97 per barrel at the end of the previous session, up over 7 percent from the previous session but down from a record high of $144.42 on Tuesday.

Meanwhile, the war reportedly caused the biggest spike in inflation in four years in the U.S., and a University of Michigan survey revealed that consumer sentiment has slumped and worries over higher costs have escalated – all of which may negatively impact demand.

Over in Europe, ACI Europe warned that continued disruption of the Hormuz would mean airports and airlines would be short on supply in three weeks during the start of the peak summer travel season, since about 30 percent of their jet fuel comes from the Gulf region.

Seven airports in Italy have already restricted access to fuel.