Oil prices fluctuate as Mideast tensions persist

Global oil prices remain volatile amid rapid changes in the Israel-Iran war, with the crude price surge losing momentum after US President Donald Trump announced a ceasefire between the two countries.

Energy analysts previously projected oil prices could approach $100 a barrel if Iran decided to close the Strait of Hormuz in retaliation against attacks by Israel and the United States.

After Trump announced on Monday that Israel and Iran had agreed to an immediate ceasefire, Brent crude futures declined by 5.3% to $67.66 a barrel and US West Texas Intermediate crude fell by 5.5% to $64.76.

However, tensions remain high, with Israel and Iran already accusing each other of ceasefire violations. Any changes in events or oil transport disruptions in the Strait of Hormuz could lead to oil price fluctuations, said energy analysts.

If oil prices soar to $100 a barrel, the upsurge should be short-lived because the global economy remains sluggish, showing no signs of fully recovering to drive up oil demand, said a Thai energy analyst who requested anonymity.

Opec and its allies would likely increase oil supply to slow a rapid increase in prices, he said.

“In Thailand, measures are in place to control domestic fuel prices if crude prices rise,” said the analyst.

Government authorities are using the Oil Fuel Fund to regulate diesel, gasohol and gasoline prices to ease the financial burden on motorists.

The retail price of diesel, which is also used by many industries, was capped at 31.94 baht a litre as the government reduced diesel users’ contributions to the fund

In another development, the national oil and gas conglomerate PTT Plc signed a long-term purchase contract to buy 2 million tonnes of liquefied national gas (LNG) from Alaska to avoid price fluctuations in the spot market and address the trade imbalance with the US.

LNG makes up around 60% of the fuels used for power generation in Thailand.