Oil Rises After Ship Fire Incident in Strait of Hormuz
Oil prices rose on Wednesday, reversing an initial decline after reports of gunfire on at least three container ships in the Strait of Hormuz and the lack of progress in peace talks between the US and Iran.
Brent crude rose 73 cents, or 0.7%, to US$99.21 a barrel at 10:49 GMT, while WTI rose 59 cents, or 0.7%, to US$90.26. Both benchmarks had also risen about 3% on Tuesday.
The incident in the strategic shipping lane has strengthened geopolitical risk premiums. Reports said three container ships were hit by gunfire on Wednesday, while Iran's Revolutionary Guard Corps Navy seized two vessels, citing maritime violations, and moved them to Iran's coastal region, according to the semi-official Tasnim news agency.
The market responded as the Strait of Hormuz is a critical chokepoint for global energy flows. Until the Iran war began in late February, this waterway was said to carry approximately 20% of the world's oil and LNG supply, so any security disruptions or shipping restrictions could potentially increase the perceived risk of supply disruptions and boost prices even without any confirmed changes in physical supply.
From a diplomatic perspective, US President Donald Trump announced he would extend the ceasefire with Iran indefinitely, hours before it was due to expire. However, both sides reportedly did not attend peace talks in Pakistan, adding to uncertainty about the direction of de-escalation.
Going forward, the market will monitor security developments in the Strait of Hormuz, further details regarding the ship seizure and shipping restrictions, and any signs of a resumption of US-Iran diplomatic channels. Changes in the intensity of maritime incidents or progress in negotiations could potentially determine whether the price rally is sustained or subject to further correction. (gn)*
Source: Newsmaker.id
