Oil prices rose yesterday over renewed high tensions between the United States and Iran following attacks on ships near the critical Strait of Hormuz. Iran has also continued to criticize an ongoing American naval blockade. Recall that US President, Donald Trump had announced an indefinite extension to an ongoing two-week ceasefire with Iran, after media reports hinted at a breakdown in peace talks.
Investing.com also reported that the international benchmark, Brent Crude Futures, rose 3.4% to $101.82 a barrel, while the US benchmark, West Texas Intermediate crude futures gained 3.7% to trade at $93.01 a barrel.
Iran’s state media reported that the paramilitary Islamic Revolutionary Guards Corps had attacked a ship in the Strait of Hormuz, saying the vessel was “stranded” on the Iranian coast. Shipping monitor UK Maritime Trade Operations Centre said a separate container ship in the strait was attacked, shortly after a boat belonging to the Revolutionary Guards struck another ship in the area.
Iranian state media said the Revolutionary Guards seized these two vessels, the MSC Francesca and Epaminondas, claiming they were attempting to sail “without the necessary permits.” Investing.com further reported that the attacks and seizure kept tensions high, with the US naval blockade of Iranian ports exacerbating the situation.
It added that tanker shipping through the strait, a vital waterway off of Iran’s southern coast through which roughly a fifth of the world’s oil traverses, remains all but closed “Trump’s announcement of the ceasefire extension came minutes after the closing bell on Wall Street on Tuesday, giving a boost to risk sentiment but doing little to quell concerns over supply disruptions,” it said Investment Director at AJ Bell, St Russ Mould, said:
“Markets are still pricing in a relatively speedy and peaceful settlement, which quickly brings down the oil price, judging by not only how the commodity is trading, but the lack of activity in leading measures of volatility and how oil stocks remain relatively unloved in the broader context of global stock markets.
“Despite ongoing tensions between the USA and Israel on one side and Iran on the other, the damage already done to oil and gas production capacity and the disruption to shipping through the Strait of Hormuz, the price of Brent crude oil still stands below its high for this year, let alone 2008’s peak of $147 a barrel. On an inflation-adjusted basis, oil is still lower relative to the high of two decades ago in real terms.”
Trump has also said an ongoing US blockade of Iranian ports and coastline — an action that Iran’s foreign minister has argued constitutes an “act of war” — will stay in place. He argued that Iran is “collapsing financially!” and wants the strait to be “opened immediately” because Tehran is “Starving for cash.”
The president claimed that Iran was losing $500 million a day from the effective closure of the Strait of Hormuz, and that there could never be a deal with Iran without lifting the blockade against the country. US Central Command said 28 vessels had been turned around or told to return to port since the start of the naval blockade.
“A complete ceasefire only makes sense if it is not violated by the maritime blockade and the hostage-taking of the world’s economy, and if the Zionist warmongering across all fronts is halted; reopening the Strait of Hormuz is impossible with such a flagrant breach of the ceasefire,” Mohammad-Bagher Ghalibaf, Iran’s parliament’s speaker, said on X. American Petroleum Institute data showed weekly crude inventories shrank 4.4 million barrels, much more than expectations for a draw of 1 mb.
In the meantime, Islamabad still waits for Iranian and American representatives to arrive for peace talks. Parts of the city remain sealed off, the signs are still up and the hotel where talks were expected to take place is empty, ready for the hopedfor return of high-level delegations. But after several days of fevered anticipation, the atmosphere has changed.
