Government advisor: The ceasefire agreement provided temporary relief to oil markets

 Government advisor: The ceasefire agreement provided temporary relief to oil markets

 The Prime Minister's financial advisor, Mazhar Mohammed Saleh, confirmed on Thursday that the ceasefire agreement between Iran and the Zionist entity has returned oil markets to a downward trend.

Saleh told the Iraqi News Agency (INA): "Following the announcement of a ceasefire agreement between Iran and the Zionist entity, which halted threats to close the vital Strait of Hormuz - threats issued within the context of escalation with the Zionist entity - oil markets returned to a downward path and headed towards peace indicators, after a sudden hedging wave that they witnessed at the height of tension."

He added, "The Strait of Hormuz is strategic, through which approximately 20% of the world's crude oil passes, in addition to a third of liquefied natural gas supplies destined for international markets under ongoing, long-term contracts." He noted that "the decision to cease the war has given energy markets a strong positive signal indicating the stability of supply routes, especially in the world's most important energy corridor. "

“This was directly reflected in Brent crude prices, which are considered a benchmark for oil pricing, as they recorded an immediate drop of more than 5%, equivalent to $3 to $4 per barrel in a single session. This is considered one of the largest daily declines in recent times, which means the end of the threat and the return of balance to the market,” he continued, stressing that “the end of the threats that were threatening the Strait of Hormuz and the return to the language of calm represented a temporary moment of relief for the markets. However, in reality, this relief does not necessarily mean long-term stability, as the fragility of the truce and the possibility of renewed clashes if diplomatic efforts fail, maintain a high level of caution in future forecasts.”

He explained that "the market is now pricing oil and is once again being affected by traditional economic factors: from weak demand, to OPEC+ production policies, to competition between exporting countries from within and outside the organization." 

He pointed out that "public finances in Iraq must adhere to the constants of hedging and financial discipline included in Law No. 13 of 2023 (the three-year budget), which is spending according to the optimal minimum requirements and resorting to domestic borrowing when needed, as permitted by the law and in a way that does not disrupt basic operational and investment expenditures, even with the disappearance of the (strategic oil premium) generated by threats to the Strait of Hormuz." link