Oil Rises, US-Iran Clashes Renew Shadow Over Strait of Hormuz
Oil prices rose after renewed clashes between US and Iranian forces raised the risk of supply disruptions and dimmed the prospects for a deal to end the nearly 10-week-old war. The rise came after the rally was halted by three consecutive days of declines.
At the time of writing, Brent was around $102 per barrel. Brent had risen as much as 2.5% to near $103 per barrel, while WTI was hovering around $97 per barrel. In morning trading in Singapore, Brent's July contract rose 2.3% to $102.36, and WTI's June contract rose 2.3% to $96.95.
The US military stated that it intercepted what it called an "unprovoked" Iranian attack and responded with a self-defense strike as a guided-missile destroyer passed through the Strait of Hormuz. However, US Central Command asserted that it was not seeking further escalation.
President Donald Trump said the three warships successfully exited the strait unharmed, according to social media posts. But he also issued a strong statement pressuring Iran to quickly agree to a deal. Market focus remains on the Strait of Hormuz, which has been effectively closed since the war began in late February, triggering an energy supply shock: oil flows have been disrupted and several wells in the region have reportedly been shut down, under a “double blockade” as Tehran obstructs traffic and the US prevents ships from calling at Iranian ports.
Despite the price increase, some market participants believe the reaction remains relatively controlled. An investment manager, Haris Khurshid of Karobaar Capital, said the modest increase indicates the market still views the situation as “manageable” for now, unlike the early phase of the conflict when any escalation triggered major price adjustments.
Fundamentally, the protracted war has tightened supplies and pushed up energy cost pressures, which in turn have been passed on to consumers through spikes in gasoline and diesel prices. The International Energy Agency (IEA) warns that the world is losing 14 million barrels per day due to the war and assesses that the post-conflict production recovery will be gradual. The IEA also confirmed its readiness to take further action after members agreed in March to release 400 million barrels from reserves. The market's next monitoring variables include the status of traffic through the Strait of Hormuz, Iran's response to the proposed reopening of the route, and oil market liquidity, which is said to be declining and could increase volatility. (asd)*
Source: Newsmaker.id
