Oil Rises, Hormuz Risk Renews Geopolitical Premium
Oil and gas prices rallied after the US Navy seized an Iranian vessel, escalating tensions that have again disrupted traffic in the Strait of Hormuz. Brent traded near $95 per barrel on Monday (June 20), recovering about half of Friday's sharp decline, while European gas rose about 3%.
This move came after Tehran re-closed the chokepoint on Saturday, following claims that a US blockade of Iran-linked shipping violated a ceasefire agreement that expired Tuesday. Uncertainty also casts a shadow over peace talks, with Iran reportedly still reviewing the US proposal, while a high-level US delegation is scheduled to travel to Islamabad for talks on Tuesday.
The primary channel for prices is physical supply and logistical constraints, not just sentiment. Disruptions to flows, longer shipping times, and rising freight and insurance costs have tightened effective supply, keeping risk premiums embedded even as the market remains hopeful of a quick resolution.
The risk is significant because Hormuz is a strategic waterway: before the US-Israeli war against Iran in late February, about one-fifth of global oil and LNG flows passed through this corridor. On Monday, commercial traffic was reported to have nearly ground to a halt, with only a handful of vessels recorded moving, underscoring the severity of the distribution bottlenecks.
Looking ahead, the market tends to "carry" a risk premium as the ceasefire deadline approaches, but has not fully locked in a worst-case scenario, leaving prices vulnerable to fluctuations based on headlines. Near-term monitoring focuses include the operational status of Hormuz, the intensity of physical flow disruptions, movements in shipping/insurance rates, and developments in negotiations leading up to Tuesday. (asd)*
Source: Newsmaker.id
