Hormuz Freezes, Oil Jumps!
Oil prices surged again after the United States and Iran launched new attacks on each other, while the status of the Strait of Hormuz remains disputed. Iran declared the waterway closed until further notice, but US Central Command (CENTCOM) denied the claim, saying its forces resumed their attacks to ensure freedom of navigation.
Brent crude rose toward US$79 per barrel after strengthening 5.4% over the past week. Meanwhile, West Texas Intermediate (WTI) moved closer to US$74 per barrel. At 8:20 a.m. Singapore time, Brent for September delivery rose 3.5% to US$78.64 per barrel, while WTI for August delivery rose 3.6% to US$73.95 per barrel.
The latest attack on Sunday afternoon was the fourth US attack in a week. CENTCOM stated the strikes were in response to Iran's attack on a Cyprus-flagged container ship. Other reports also indicated that Iran's Revolutionary Guard Corps (IRGC) had fired again on commercial vessels, while US aircraft were said to have intercepted Iranian cruise missiles and drones.
Uncertainty in the Strait of Hormuz has once again added a war premium to oil prices. This waterway is crucial because it typically carries about a fifth of global crude oil and liquefied natural gas supplies. Shipping traffic through Hormuz was reportedly virtually non-existent on Monday, although the southern shipping lane coordinated by Oman remained open.
The prospects for diplomacy are also dimming. Iranian Parliament Speaker and lead negotiator, Mohammad Bagher Ghalibaf, declared the era of unilateral agreements over. Tehran insists Washington must first honor its previous commitments regarding Hormuz transit and normalizing Iranian oil exports before talks can resume.
The biggest risk to the market is if the conflict begins to target energy infrastructure more broadly. The attack on oil drilling facilities in Kuwait is a serious signal, being the first direct attack on oil infrastructure in weeks. If the escalation spreads to regional energy facilities, analysts warn that oil prices could potentially move towards US$100 per barrel. (asd)*
Source: Newsmaker.id
