Oil gives back gains as Iran signals it could reopen Hormuz
Reports that Tehran could reopen the strait within 7 days if US military pressure eases lifted hopes for diplomacy.
By BBCorp
What happened
Iran reportedly said it can reopen the Strait of Hormuz within 7 days if the United States eases military pressure. Oil prices reversed early gains on Tuesday and were later little changed after President Trump told the UN General Assembly he believes the US and Iran will strike a deal after the November midterm elections, while calling for pressure on Iran to be maintained.
Why it matters
The Strait of Hormuz is the main sea route for oil leaving the Gulf, so any disruption there adds a supply-risk premium to crude. Signs that it could reopen take some of that premium out, while doubts about timing keep it in. Analysts at TD Securities note that heavy speculative positioning leaves crude especially sensitive to these headlines, so prices can swing sharply on each new report. Energy prices also feed into inflation, which is what central banks are reacting to.
What to watch
Whether talks actually begin, any change in tanker traffic through the strait, and the weekly US crude inventory figures.
Gold