Oil Rises, Iran Attack on Energy Assets Boosts Hormuz Risk Premium
Oil prices rose after posting their first decline in nearly a week, as Iran escalated attacks on energy infrastructure around the Persian Gulf. Market sentiment has refocused on supply risks, particularly as the conflict enters its third week and shipping in the Strait of Hormuz remains virtually halted.
Brent crude rose to near US$105 per barrel after falling 2.8% on Monday, while WTI hovered around US$98. Operations at the Shah gas field in the United Arab Emirates were reportedly halted, while oil fields in Iraq and a major port in the UAE were also targeted by Iranian drones and missiles.
These disruptions offer a positive outlook for global energy supply as the disruption in Hormuz is beginning to be felt on the consumption side, particularly in Asia. Cumulatively, oil prices are said to have risen more than 40% since the outbreak of the war, although the market corrected on Monday as the US prepared to release the initial tranche of emergency crude reserves.
However, the market remains in a two-way situation: geopolitical headlines that are heating up risk premiums are being faced with efforts to stabilize supply through stock releases and logistical adjustments. This pattern has led to widening daily volatility as the market continues to gauge the true extent of the supply loss and how long the disruption will last.
On the policy front, US President Donald Trump has threatened to expand attacks on Kharg Island to target oil infrastructure, while stating that Washington is suppressing Iran's ability to threaten commercial shipping in Hormuz and renewing its call for support from other countries to secure the waterway. At the same time, US Treasury Secretary Scott Bessent said Washington is still allowing Iran to ship oil through the waterway, adding to the complexity of interpreting the risks.
In the region, the UAE and Kuwait are reportedly reducing output again, while Saudi Arabia and the UAE are seeking to increase exports through alternative routes that bypass Hormuz. JPMorgan assesses that transit through the strait is potentially "conditional" depending on the political affiliation of the vessels, while Bloomberg data shows the number of Iranian vessels surged to a wartime high on Monday. Brent for May rose 4.7% to US$104.89 per barrel at 6:02 a.m. in London, and WTI for April rose 5.2% to US$98.35. (asd)
Source: Newsmaker.id
