Oil Rises, Market Tests Credibility of US Signals on Hormuz
Oil prices rallied after another volatile session, as the market digested rapidly changing messages from the Trump administration regarding the Iran war and shipping security through the Strait of Hormuz. West Texas Intermediate (WTI) crude rose 6.2% to US$88.59 per barrel after plunging 12% on Tuesday, extending a series of extreme swings that have rocked the market this week.
The volatility was fueled by a flurry of information regarding tanker escorts. US Energy Secretary Chris Wright briefly posted—and then deleted—a message that the US Navy had escorted tankers through the strait near Iran, before the White House admitted no such operation had occurred. This incident added uncertainty to a market that is highly sensitive to headlines, especially as tanker traffic through Hormuz has dwindled dramatically.
The effective disruption of the Strait of Hormuz—a waterway that typically handles about a fifth of global oil flows—has forced major producers to cut production and pushed up energy prices, including oil and natural gas. Market participants are now assessing whether shipping traffic can return to normal, as the recovery in shipping is a key determinant of whether energy risk premiums will persist or decline.
While Trump said Monday night that the conflict could end soon, though not this week, US officials on Tuesday hinted at increased military operations and a slim chance of diplomacy, dampening market optimism. Conflicting social media posts, including narratives about mines, have sent prices into a "fog of war" pattern, as market participants react in real-time to unconfirmed developments.
From a fundamental perspective, supply pressures are becoming increasingly pronounced. Saudi Arabia, Iraq, the United Arab Emirates, and Kuwait are said to have reduced collective production by 6.7 million barrels per day, or about 6% of global production, while the UAE's largest refinery has halted operations after a drone attack. Saudi Aramco CEO Amin Nasser warned of increasingly severe consequences for markets and the global economy if the disruptions continue. In morning trading in Singapore, WTI for April delivery rose 5.9% to US$88.39 per barrel, while Brent for May delivery closed 11% lower at US$87.80 per barrel on Tuesday. (alg)
Source: Newsmaker.id
