• Oil prices remain steady at $70 despite peace talks uncertainty and limited traffic through the Strait of Hormuz.
• Investors' optimism about a negotiated end of the conflict is keeping Oil prices from escalating further.
• The timing of the next round of talks remains uncertain, with the status of Hormuz being a key point of friction.

Crude Oil prices remain flat for the second consecutive day this week, with the price of the US benchmark West Texas Intermediate (WTI) barrel stuck at the $70.00 area. The uncertainty surrounding the US-Iran conflict and this weekend’s skirmishes have failed to deter investors from betting on a negotiated end of it, which is keeping Crude Oil at pre-war levels.

News from Iran, however, remains confusing. US President Donald Trump said on Monday that Tehran requested a meeting, following a round of reciprocal attacks over the weekend. Iran’s Foreign Ministry has denied any plan to meet US negotiators this week but announced that it will send an expert delegation to Doha.

Traffic through the Strait of Hormuz collapses

This weekend’s hostilities have also limited oil tankers’ traffic through the Strait of Hormuz. According to data by the Strait of  Hormuz Live Tracker, only 5 vessels have crossed the waterway in the last 24 hours, below the average of around 30 last week and a minimal fraction of the daily average of 160 vessels before the war.

The status of the key waterway remains a key point of friction between the US and Iran. Ebrahim Azizi, the Chairman of the Iranian Parliament’s National Security and Foreign Policy Commission, said in a local broadcaster that “the Strait of Hormuz is an inseparable part of Iran’s national sovereignty” and that it will be managed solely by the Islamic Republic.

These views contrast with the position of the US, which has called on Iran to simply step aside and let traffic flow freely and safely through the strait.

Markets, however, seem to believe that both parties will, eventually, reach a lasting peace agreement, which is keeping Oil prices from appreciating further. WTI Oil is set to close the month with a nearly 20% decline, adding to a 15% drop in May, following the first US-Iran ceasefire agreement. Oil prices have returned to pre-war levels despite the depleted global reserves and the trickle of tankers crossing the Hormuz chokepoint. Only time will say if market expectations were too optimistic.