Oil Weakens, Hormuz Risks Remain!
Oil prices weakened slightly in trading on Tuesday (May 5), paring some of the sharp gains at the start of the week. Brent moved near US$113 per barrel and had jumped 5.8% on Monday, while WTI hovered around US$104 per barrel. Despite the correction, oil prices remained at high levels as the market continued to monitor renewed tensions between the United States and Iran around the Strait of Hormuz.
Tensions escalated after the US military claimed to have repelled an Iranian attack while guiding two US-flagged vessels through the Strait of Hormuz. Simultaneously, the United Arab Emirates reported that an oil terminal in Fujairah had been hit. This incident casts doubt on the four-week ceasefire between Washington and Tehran.
The US is currently attempting to open the way for ships stranded in the area. However, this move has triggered a response from Iran, which has expanded its zone of control around the strait. Several vessels have reportedly begun moving away from the maain route and congregating near Dubai, indicating that shipping operators still perceive high security risks.
Fundamentally, the Strait of Hormuz remains a focal point for global oil markets. This waterway is crucial for global energy distribution, so disruptions to shipping traffic could tighten supply and keep oil prices high. Analysts warn that oil prices could surge further if the conflict recurs and damages more energy infrastructure.
Meanwhile, surging energy prices have begun to raise new concerns about global inflation. The yield on the 30-year US Treasury bond has risen above 5% as markets begin to anticipate the Fed could adopt a more hawkish stance if price pressures continue to escalate. Similar conditions are also being seen in Asia, including the Philippines, which has recorded high annual inflation due to its heavy dependence on oil imports from the Middle East.
Overall, the current oil correction does not indicate that risks have abated. Brent prices are still supported by geopolitical uncertainty, disruptions to the Strait of Hormuz, and threats to energy facilities. As long as there is no certainty that the shipping lane will be safe again, oil has the potential to remain expensive and vulnerable to sharp fluctuations following developments in the US-Iran conflict.
5 Key Points:
- Brent fell to near US$113 after surging 5.8% on Monday.
- The US and Iran are again engaged in tensions around the Strait of Hormuz.
- The Fujairah oil terminal was attacked, adding to the risk to energy supplies.
- The Strait of Hormuz remains unsecured, keeping oil prices supported by a risk premium.
- The energy surge is fueling inflation concerns, including the possibility of the Fed returning to hawkishness. (asd)*
Source: Newsmaker.id
