Oil Strengthens Amid US-Iran Geopolitical Deadlock
Oil prices rose as the US-Iran standoff over access to the Strait of Hormuz remained unresolved, maintaining high supply risks. Brent traded back above US$114 per barrel, reflecting the lingering geopolitical premium after the flow of oil, gas, and petroleum products from the Persian Gulf halted since the conflict broke out in late February.
The tone of the conflict further intensified after US President Donald Trump issued a harsh statement on social media. On the policy front, a Wall Street Journal report stated that Washington was preparing a scenario for a longer naval blockade of Iranian ports, with the approach of tightening economic pressure and oil exports considered less risky than other military escalation options.
The supply bottleneck has driven up prices of fuels such as gasoline, diesel, and aviation fuel, amplifying concerns about global inflation. From a macro-transmission perspective, rising energy prices have the potential to increase pressure on inflation expectations and maintain a tight monetary policy bias for longer, especially if supply disruptions persist.
A ceasefire has reportedly held since early April, but diplomatic efforts to bring negotiators together have yet to yield results. CNN reports that mediators expect Iran to submit a revised proposal within days, while Kpler estimates the impasse could last weeks, with global markets or Iran being the deciding factor in when the pressure begins to ease.
Pressure on Tehran is also increasing through sanctions, including an OFAC warning to financial institutions about the risk of sanctions on independent refineries in China and a confirmation of sanctions exposure for paying tolls to pass through Hormuz. Markets will be monitoring three things: developments in US-Iran negotiations, the duration and effectiveness of the blockade and its impact on physical flows in the Persian Gulf, and any escalation of sanctions policies that could disrupt the broader supply chain. (gn)*
Source: Newsmaker.id
