Oil prices rise sharply after Iran launches attacks on tankers near strait of Hormuz | US-Israel war on Iran
Oil markets posted their sharpest price rise in nearly two months after a series of attacks on fossil fuel tankers near the Strait of Hormuz led Donald Trump to declare the ceasefire agreement with Iran “over”.
Global crude oil rose 5 percent to above $78 a barrel on Wednesday, according to Brent; This was the highest price since the United States and Iran agreed to a ceasefire last month while negotiating an end to the war.
The fragile ceasefire broke down after Iran launched attacks on at least three tankers passing through the Strait of Hormuz within 48 hours; including a ship carrying about 8 cubic meters of liquefied natural gas, considered the cargo most at risk of explosion.
According to ship tracking data, at least four oil and gas tankers turned back from trying to pass through the strait; This has disrupted efforts to normalize the flow of oil and gas through the vital trade route after months of disruption.
“Tanker traffic in the Strait of Hormuz has essentially stopped, which tells you more about risk perception right now than any statement coming from Washington or Tehran,” said Jorge León, head of geopolitical analysis at Rystad Energy.
León said the “real test” will come after the funeral of Iran’s supreme leader Ayatollah Ali Khamenei this weekend, after the United States and Iran “showed whether there is still the will for a diplomatic exit.”
Global oil prices have fallen from highs of more than $110 a barrel in late May as more tankers were able to pass through the strait in hopes that US-Iran talks would bring an end to the war that has disrupted the flow of about 20 million barrels of oil a day from Gulf producers.
The collapse of the ceasefire in Europe reignited a 5% rise in gas market prices. The benchmark Dutch contract rose more than €2.40 to €49.00 per megawatt hour (MWh), while the UK equivalent rose 6 pence to 116.75 pence per thermal.
The return of rising energy prices risks rising costs for households, which face the steepest increase in energy bills in the summer months in four years. If they continue, higher market costs could mean rising gas and electricity prices in the winter, as well as higher pump prices.
Luke Bosdet, a spokesman for motoring group AA, said: “This is the news UK drivers don’t want to hear ahead of the summer holidays later in the month. The end of the ceasefire is worrying for UK pump prices but all is not lost.”
“To begin with, a feature of the US-Iran war was extremely volatile oil prices, which were reflected at the pump. However, the sharp decline in gasoline and diesel prices generally followed the recent decline in wholesale costs and was reflected at the pump much more quickly than previously expected,” he said.
Market analysts refrained from predicting oil prices would rise above $100 a barrel after finding that the global market was more resilient to disruptions than initially feared.
“Nothing can be ruled out,” said PVM Oil Associates analyst Tamas Varga. “However, when revising oil price forecasts, the market’s admirable adaptability to the initial crisis and the $56 drop in the Brent price in May and June should be kept in mind.”
The market initially expected a loss of 20 million barrels per day in global crude oil supplies as a result of the effective blockade of the Strait of Hormuz since March this year. However, by using alternative supply routes and secret ship transit, Gulf producers managed to reduce the net loss to 12.2 million barrels per day.
Meanwhile, higher production from unaffected producers, the release of emergency crude stocks and exemptions from US sanctions covering Russian and Iranian oil in floating storages led to an increase in supply by another 9.1 million barrels.
“The result is that the actual loss from the original 20 million barrels per day is only 3.1 million,” Varga added.
