Middle East crisis Oil market

Trump Extends Exemption – Oil Prices Turn Down

Oil prices turned on their heels and fell 2-3 percent in the early afternoon. This after the Trump administration extended an exemption for maritime transport of oil, fuel and fertilizer in the US by 90 days, Bloomberg reports.

At 1:35 p.m., fuel oil was down 1.8 percent and US WTI oil was down 2.6 percent from reaching its highest levels since the ceasefire came into effect earlier on Friday, according to the FT.

The exemption, which would otherwise have expired on May 17, is intended to make it easier for foreign-flagged ships to transport goods between US ports. The US Jones Act of 1920 usually requires that goods transported by sea between US ports be carried on US ships, a requirement the exemption now removes for a number of energy-related assets.

– This extension provides both predictability and stability for the US and global economies, White House spokesman Taylor Rogers told Bloomberg.

After the rally – oil at its highest level since the ceasefire

Oil prices are now at their highest levels since the US and Iran first agreed to a ceasefire in early April, writes the FT.

In the wake of the stalemate in the Persian Gulf and the stalled peace talks, oil has risen by more than 18 percent this week. On Friday, oil was up by as much as 2.3 percent, above $107 a barrel, while WTI oil is trading at $97 a barrel.

Deutsche Bank analysts note that uncertainty in the Middle East continues to linger.

“Tensions between the US and Iran show no signs of abating while the Strait of Hormuz remains effectively closed,” the bank writes.

UBS analyst Giovanni Staunovo believes that investors should expect continued high oil prices as long as flows through the Strait of Hormuz remain limited, writes Bloomberg.