Brent nears $100/bbl amid Hormuz disruption
The front-month ICE Brent contract has gained $4.35/bbl on the day, to trade at $99.42/bbl at 09.00 GMT.
IMAGE: Oil pumpjacks. Getty Images
Upward pressure:
Brent’s price has shed the previous day’s losses amid escalating tensions in the Strait of Hormuz.
At least three container vessels in the region were hit by gunfire yesterday, the United Kingdom Maritime Trade Operations (UKMTO) reported.
The attacks come amid continued US blockade of the Strait - a move Tehran has labelled an act of war.
“UKMTO has received a report of an incident 8 NM [nautical miles] west of Iran. A master of an outbound cargo ship reports having been fired upon and is now stopped in the water,” the UKMTO reported.
Another containership sustained heavy damage to the bridge, after being hit by gunfire 15 NM northeast of Oman, the maritime intelligence agency reported.
The UKMTO said the Liberia-flagged vessel was approached by an Iranian gunboat and was subsequently fired upon.
“The longer these supply disruptions persist, the tighter the oil market becomes, leaving a longer path towards normalisation for markets once hostilities end,” two analysts from ING Bank said.
Prior to the outbreak of the conflict on 28 February, the waterway carried about 20% of global seaborne oil flows. “Energy flows will take time to recover,” ING Bank analysts added.
Downward pressure:
Brent’s price has felt some downward pressure amid some hopes of de-escalation in the Middle East conflict.
Yesterday, US President Donald Trump announced an indefinite extension of the ceasefire to allow further negotiations, as the Middle East conflict enters its second month.
A fresh round of talks between Washington and Tehran is planned for later today in Islamabad, according to media reports. Although, the latter’s willingness to participate in negotiations remains unclear.
“These talks are important, with the current ceasefire set to end on Wednesday,” ING Bank’s analysts said. “A lack of progress would likely push oil and gas prices higher,” they added.
By Aparupa Mazumder
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