Oil Prices Surge Amid Tensions Surrounding Hormuz
Oil Prices Surge Amid Rising Tensions Following Iran’s Decision on Strait of Hormuz
Oil prices experienced a significant increase on Monday after Iran reversed its decision on Saturday to open the Strait of Hormuz, escalating tensions with the United States just ahead of the ceasefire’s expiration.
Tehran stated that the ongoing U.S. blockade of Iranian ports, despite Iran announcing the reopening of the strait on Friday, was the reason behind the reinstatement of "strict control" over Hormuz.
A CMA CGM vessel was reportedly fired upon on Saturday, according to the French shipping group, which provided the information to AFP on Sunday.
In a related development, the U.S. military opened fire on an Iranian cargo ship that was attempting to breach the blockade of Iranian ports, taking control of the vessel, President Donald Trump announced on his platform, Truth Social.
On Sunday, traffic through the strait was reported to be at a standstill, according to the Marine Traffic website.
As a result, "physical oil flows remain constrained by disruptions in deliveries, extended transport times, and rising freight and insurance costs," stated Bjarne Schieldrop, an analyst at SEB.
As of 09:10 GMT (11:10 Paris time), the price of Brent crude for June delivery rose by 5.24% to $95.12 per barrel. Meanwhile, West Texas Intermediate, the U.S. benchmark crude, for May delivery increased by 5.82% to $88.73 per barrel.
Despite this significant rebound in prices compared to Friday, the current levels suggest that "the market continues to express strong confidence that a solution will be found" between the United States and Iran, noted Arne Lohmann Rasmussen, an analyst at Global Risk Management.
However, uncertainty looms on Monday regarding the potential resumption of negotiations in Pakistan between Tehran and Washington, with less than two days remaining until the ceasefire expires.
Currently, "we do not have a plan for the next round of negotiations, and no decision has been made regarding this," stated Foreign Ministry spokesperson Esmaïl Baghaï, questioning the United States’ commitment to the diplomatic process.
Without an agreement between Washington and Tehran, prices are likely to rise sharply, as "each day the Strait of Hormuz remains closed brings us closer to a potentially painful moment of shortages," Mr. Schieldrop explained.
