Oil Prices Rise Amid Resurgent Iran-US Tensions
Oil prices rose on Friday (May 8) after renewed fighting between the United States and Iran, threatening a fragile ceasefire and dimming hopes of progress toward reopening the Strait of Hormuz, a key transit route for oil and LNG. Brent crude rose 67 cents, or 0.67%, to US$100.73 per barrel at 06:50 GMT, while WTI crude rose 45 cents, or 0.47%, to US$95.26 per barrel, after rising more than 3% in early trading.
These gains broke a three-day downtrend triggered by reports that the US and Iran were nearing a peace agreement, although larger issues such as Iran's nuclear program remain unresolved. However, for the week, both contracts remain on track to decline by around 6%, indicating that the market still believes geopolitical uncertainty has not yet fully translated into consistent price support.
The price surge came after Iran accused the US of violating a month-long ceasefire, while the US said its attack was a response after Iran fired on a US Navy ship passing through the Strait of Hormuz on Thursday. The Iranian military also stated that the US targeted an Iranian oil tanker and other vessels, as well as civilian areas around the strait and on land. However, President Donald Trump said the ceasefire was still in effect, reinforcing market perceptions that geopolitical headlines could quickly shift from de-escalation to escalation.
From a fundamental perspective, the primary focus remains on supply risks: the Strait of Hormuz previously served as a corridor for about a fifth of global oil and LNG supplies before the war began on February 28, so any disruption to this route has the potential to raise energy risk premiums and heighten global inflation sensitivity.
Beyond geopolitical factors, the market also highlighted reports that US regulators (CFTC) were investigating US$7 billion in oil transactions leading up to the Iran war announcement, which were said to involve many short positions on ICE and CME. Developments in the Hormuz conflict, diplomatic signals, and indications of disruptions to physical flows will be key variables the market will monitor to determine whether this rebound continues or fades.
Source: Newsmaker.id
