Oil Trims Gains Amid Strait of Hormuz Tensions
Oil prices pared some gains on Monday (May 4) after the U.S. military announced that two U.S. Navy guided-missile destroyers had entered the Gulf to break through an Iranian blockade, and two U.S. vessels had passed through the Strait of Hormuz. The statement came after Iran had previously claimed to have prevented U.S. warships from entering the Gulf.
Brent crude rose 1.9% to $110.22 per barrel at 13:07 GMT after briefly touching $114.30. WTI gained 0.5% to $102.41 per barrel, after rising as high as $107.46 earlier in the session.
Prices briefly surged after Iran's Fars news agency reported that Tehran attacked a U.S. warship attempting to pass through the strait and forced it to turn back. However, the U.S. Central Command denied any U.S. Navy vessels were hit on Monday, dampening the price rally, although volatility remained high.
UBS believes the price bias remains upward as long as oil flows through the Strait of Hormuz remain limited. US President Donald Trump said Washington would begin efforts to assist ships stuck in the strait, but markets see no clear peace agreement and shipping through the strategic waterway remains hampered, keeping a risk premium attached to prices.
Tensions on the ground persist. Iran's military warned US forces against entering the strait and declared a "strong" response to any threats. Meanwhile, the United Arab Emirates accused Iran of attacking an empty oil tanker belonging to Abu Dhabi State Oil Company (ADNOC) with drones as it attempted to transit the strait, raising the risk of escalation and reinforcing market focus on the security of the energy route.
Source: Newsmaker.id
