Hormuz Blockade Pushes Oil Prices Up More Than 10%
Newsmaker.id - Oil prices surged again on Tuesday (July 14th) after tensions between the United States and Iran escalated in the Strait of Hormuz. Brent crude rose around 2% to US$84.98 per barrel, while West Texas Intermediate rose 2.1% to US$79.79 per barrel. This increase extended the nearly 10% surge in previous trading and brought oil to its highest level in a month.
The oil price increase was triggered by US President Donald Trump's decision to reimpose a blockade on Iranian vessels entering and leaving the Strait. Trump also demanded a 20% payment on cargo passing through the Strait of Hormuz as compensation for US efforts to maintain the security of the strategic shipping lane. The policy is scheduled to take effect on Tuesday at 4:00 PM Eastern Time.
Tensions escalated after Iran was accused of attacking tankers belonging to the United Arab Emirates, while US forces launched renewed attacks on several targets in Iran. Washington stated that the operation was aimed at reducing Tehran's ability to disrupt commercial shipping, but retaliation by Iran and other regional groups raised concerns about the smooth flow of oil exports from the Middle East.
Global supply risks also increased after the Trump administration agreed to proceed with a Russia sanctions bill championed by the late Senator Lindsey Graham. The bill would authorize the US to impose tariffs and sanctions on countries that continue to purchase Russian oil and natural gas. This policy could potentially drive buyers to seek alternative energy sources and tighten the global oil market.
Market Impact:
Oil prices: Upward momentum has the potential to continue as long as tensions in the Strait of Hormuz remain unabated. Further shipping disruptions could tighten supply and push Brent higher.
Global inflation: Rising energy costs could increase transportation, production, and distribution costs. This risk slowing the decline in inflation and forcing central banks to maintain high interest rates for longer.
Gold: Geopolitical conflicts could support demand for gold as a safe haven asset. However, rising oil prices, fueling concerns about inflation and high interest rates, could limit the precious metal's gains.
US Dollar: The dollar is likely to gain support from demand for safe-haven assets and expectations of tighter Federal Reserve policy. The yield on the 10-year US Treasury bond has also risen amid inflation concerns. (CP)
