Oil Steady Near $111 as U.S.-Iran Ceasefire Nears Expiry and Strike Threat Resurfaces

Brent crude slipped 0.25% to $111 in early Asian trade Wednesday, giving back part of Tuesday's 0.96% gain to $110.95, as a two-week U.S.-Iran ceasefire approached expiration with no extension agreed and negotiations in Geneva effectively stalled. WTI dipped 0.21% to $103.93 after closing at $103.89. Both benchmarks remain roughly 17% above pre-war levels of around $72, with analysts estimating a $4-$10 geopolitical risk premium currently embedded in prices. The contrast with March's intraday plunge of 17% — when de-escalation hopes briefly overwhelmed the market — underlines how quickly that premium could unwind. The Strait of Hormuz has been effectively closed for three months since the conflict began February 28, cutting off roughly 20% of global oil transit. Saudi Arabia, the UAE, Kuwait and Iraq have each reduced output, with export routes blocked and storage near capacity, according to market sources. The International Energy Agency is weighing what would be the largest strategic reserve release in its history. President Trump told reporters Tuesday that renewed U.S. strikes on Iran could come by early next week if negotiations collapse, warning that "further attacks might become necessary." He simultaneously claimed efforts to end the conflict were in progress. The pattern — threats followed by pullbacks — has defined U.S. messaging since the April 8 ceasefire expired. The U.S. Senate advanced a resolution requiring congressional approval for continued military action, though it faces a presidential veto. Iran's foreign minister, Seyed Abbas Araghchi, signalled Tehran's readiness to resume hostilities. "Return to war will feature many more surprises," he wrote on Twitter. Talks in Geneva broke down after Trump dismissed Iran's latest proposal as "garbage." Shipping data shows tankers queuing on both sides of the strait. Two vessels were attacked during weekend transits. A South Korean tanker carrying 2 million barrels reportedly began crossing Tuesday after securing Iranian clearance — potentially the first successful Korean transit since late February, South Korea's foreign minister said. The U.S. Navy seized shadow-fleet tanker Skywave in the Indian Ocean overnight Tuesday, the third Iranian-linked vessel intercepted this month, the Wall Street Journal reported. The U.S. Treasury simultaneously sanctioned 19 additional tankers tied to Iranian oil exports under Washington's "Economic Fury" campaign. Consumer-side pressure is building. India, which sources 60-70% of its crude from West Asia, raised retail fuel prices twice in a week — by ₹3 per litre on May 15 and a further 90 paise on Tuesday. The Indian crude basket stood at $112.79 on May 18. State-owned refiners cut daily losses to ₹750 crore from ₹1,000 crore after Friday's price increase, but upstream disruptions continue feeding through. Whether the ceasefire is extended past Wednesday is the immediate variable. NATO is reportedly evaluating escort operations if Hormuz remains closed beyond early July, though no timeline has been confirmed. Any signal from Geneva — or another tanker seizure — will move the tape. The March session remains the reference point for how fast the risk premium can come off.