Iran Closes Hormuz, Oil Prices Soar
Oil prices rose more than US$1 on Thursday (June 11) after Iran declared the Strait of Hormuz closed to oil tankers and commercial vessels. This escalation came after the United States launched additional attacks on several Iranian targets, while President Donald Trump renewed threats of further attacks if Tehran did not immediately agree to a peace deal.
Brent crude rose US$1.48, or 1.59%, to US$94.58/barrel at 02:43 GMT. WTI rose US$1.71, or 1.90%, to US$91.74/barrel, after surging more than US$3 earlier in the session. These gains indicate the market is reintroducing a geopolitical risk premium as energy flows from the Persian Gulf remain potentially disrupted.
Iran has stated that any ship attempting to pass through the Strait of Hormuz will be shot down. However, the US military said commercial vessels are still moving in and out of the waterway, and denied Iranian media reports that US warships around Hormuz have been hit by missiles and drones. These differing claims make it increasingly difficult for the market to gauge the true state of supply.
The Strait of Hormuz is a focus of attention because it typically carries about a fifth of global oil and gas shipments. If the waterway remains closed for longer, supply from Gulf producers could become increasingly limited and energy prices could remain high. ING analysts believe the latest escalation suggests a US-Iran deal is still a long way off, while energy flows from the Persian Gulf are likely to remain very limited.
Fundamentally, US inventory data also supported price gains. The EIA reported that US crude oil stocks fell by 7.2 million barrels to 426.5 million barrels in the week ending June 5, exceeding expectations for a 4 million-barrel decline. Since the Iran war began on February 28, US oil inventories, including strategic reserves, have fallen by 79 million barrels, as Washington attempts to close the supply gap caused by the Hormuz disruption.
Supply pressure is also evident in OPEC production. A Reuters survey showed OPEC output in May fell to its lowest level in more than two decades, driven by a US naval blockade of Iranian exports and the effective closure of Hormuz, which cut off shipments from other Gulf producers. For the market, oil's direction now depends on three things: whether Hormuz is truly closed, how far the US and Iran escalate attacks, and whether global stocks continue to deplete. (asd)*
Source: Newsmaker.id
