WTI $98.96, Brent $105.97 Friday

U.S. crude and Brent futures climbed early on Friday, May 22, after investors grew less confident that U.S.-Iran talks would produce a quick breakthrough. MarketScreener reported that West Texas Intermediate rose 2.7% to $98.96 and Brent gained 3.3% to $105.97 in early trade. Reuters later reported that both contracts gave back part of those gains by the close, with Brent settling at $103.54 a barrel and WTI at $96.60. ### Why did oil jump if talks were still underway? Reuters reported from Tokyo on May 22 that traders were doubting the prospects for a breakthrough because the United States and Iran remained divided over Tehran’s uranium stockpile and control of the Strait of Hormuz. That left the market pricing in the risk that shipping through the waterway would not return to normal quickly. (finance.yahoo.com) The Economic Times reported that prices had swung repeatedly through the week as hopes for a U.S.-Iran peace deal rose and fell. Reuters said those shifting expectations left both benchmarks on track for weekly losses even after Friday’s rebound, with Brent down 5.48% for the week and WTI down 8.37%. (msn.com) ### Why does the Strait of Hormuz keep driving the market? The Strait of Hormuz remained central to trading because any disruption there affects seaborne crude flows from the Gulf. Reuters said on May 22 that investors were focused on whether a peace agreement would allow shipping traffic to return to normal through the strait. (finance.yahoo.com) Al-Monitor separately reported that Tehran and Washington were still at odds over the uranium issue and over controls on the Strait of Hormuz, even as diplomatic contacts continued. Pakistan’s interior minister, Syed Mohsin Naqvi, held talks in Tehran with Iranian Foreign Minister Abbas Araqchi on Friday, according to that report. (money.usnews.com) ### Why didn’t Friday’s rally erase the week’s losses? Brent and WTI had already fallen earlier in the week after signs of progress in negotiations led traders to price in lower geopolitical risk. Reuters reported that Friday’s rise reflected skepticism about an immediate deal, but not a full reversal in expectations that diplomacy could still produce one. (al-monitor.com) Bloomberg described the market on May 22 as one swinging with every update on U.S.-Iran peace prospects. That helps explain why prices could rise more than 3% intraday and still finish the week lower. ### What else are traders watching beyond the talks? Reuters reported that seven leading OPEC+ producers are expected to raise their July output target by about 188,000 barrels per day when they meet on June 7. (money.usnews.com) Four sources told Reuters that the increase is likely even though delivery for several members remains disrupted by the Iran war. (bloomberg.com) That OPEC+ meeting is the next scheduled supply marker for the market. Until then, traders are watching statements from Washington and Tehran, shipping conditions around Hormuz, and whether crude can hold near the levels reached in Friday’s early trade. (economictimes.indiatimes.com)