Oil prices edged higher Tuesday as traders tried to make sense of completely different stories from Washington and Tehran. The mixed signals underscore just how fragile the temporary truce between the two countries really is.
Trump claimed on Monday that talks with Iran would happen in Qatar's capital, Doha. He posted on social media that Tehran had "requested a meeting." But a spokesperson for Iran's foreign ministry reportedly denied that any talks were scheduled for the coming days. The spokesperson said an Iranian technical delegation visiting Qatar this week had nothing to do with U.S. officials.
On Tuesday, Jared Kushner and Steve Witkoff, both U.S. special envoys, arrived in Doha. A Qatari government spokesperson clarified that the envoys would meet mediators, not Iranians directly. So the question remains: will the two sides sit down together or not? That confusion is keeping oil traders on edge.
Behind the contradictory statements is a 14-point interim peace memorandum of understanding signed by the U.S. and Iran on June 17. That deal paused fighting that had disrupted oil shipments through the Strait of Hormuz, a narrow waterway where about 20% of global oil traffic normally passes.
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That is exactly what ING strategists warned about. "The price action in recent weeks reflects a market that is treating this temporary ceasefire between the US and Iran as a permanent deal," they said. "This is clearly not the case, and as we have seen over the last four months, the situation can change very quickly."
The Strait of Hormuz is a critical chokepoint for global energy flows. Its disruption in recent months drove up shipping insurance costs and threatened supply routes. The temporary truce signed June 17 brought a pause, but no permanent resolution to the nuclear dispute has been reached, leaving the market vulnerable to sudden shifts.
The numbers back them up.
Brent crude futures with August delivery are on track to drop roughly $19 from the May 29 close - a decline of about 20%. For August delivery, West Texas Intermediate crude is expected to decline approximately $16, a drop of about 19% from last month's settlement price.
The key question is whether the temporary ceasefire becomes permanent. ING strategists think that is unlikely in the next 60 days.
"It took long enough to agree on a temporary ceasefire. Reaching a permanent deal which tackles the nuclear issue within 60 days would be very optimistic," they said. They added that the ceasefire could simply be extended, which "would effectively be kicking the can down the road." Traders should not assume the current oil-price calm will last.
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