Shafaq News
Oil prices climbed about 4% on Monday after the U.S. military began a blockade of ships leaving Iran's ports, drawing threatened retaliation from Tehran against its Gulf neighbors after weekend talks on ending the Iran war broke down.
Futures finished the day off earlier highs, in a continuation of the volatility that has been a hallmark of oil trading since the U.S. and Israel jointly struck Iran on Feb. 28, kicking off a war that has now lasted more than six weeks.
While prices in cash markets continue to surge, futures traders have been more guarded due to U.S. President Donald Trump's unpredictable statements, which have vacillated from threats to expectations of a swift deal to end the conflict.
Brent futures rose $4.16, or 4.4%, to settle at $99.36, while U.S. West Texas Intermediate (WTI) crude rose $2.51, or 2.6%, to settle at $99.08. Earlier in the trading session, Brent was up more than $8 a barrel and WTI was up more than $9.
The war has resulted in the largest-ever disruption of global oil and gas supplies due to Iran's interruption of traffic through the Strait of Hormuz, which handles about 20% of global oil and liquefied natural gas flows.
Trump on Monday said 34 ships had passed through the strait on Sunday, a figure Reuters could not verify. Normally, more than 100 vessels transit the strait daily.
Inflation-hit Globe
The rising costs are hitting consumers' wallets worldwide. In the United States, drivers are cutting back as gasoline and diesel prices are at their highest since the summer of 2022, following Russia's invasion of Ukraine.
Saudi Arabia said crude oil sales to China were set to fall in May, while European Commission President Ursula von der Leyen said member states must coordinate on energy prices amid a 22 billion euro ($25.70 billion) increase in fossil fuel bills since the start of the war.
More countries have announced emergency support measures to combat rising energy costs, while the Organization of the Petroleum Exporting Countries lowered its forecast for world oil demand in the second quarter by 500,000 barrels per day.
On Monday, the head of the International Energy Agency, Fatih Birol, said member countries could release more barrels from reserves, though he hoped it would not be necessary.
Spot Crude At Records
In the spot market, prices for physical crude for immediate delivery to Europe traded at record highs of around $150 a barrel.
"(If) Trump does indeed back his blockade threat with actual boats, a convergence between the paper and physical markets may soon come," said Helima Croft, an analyst at RBC Capital Markets.
Trump warned that any Iranian "fast-attack" ships that go near a U.S. maritime blockade would be eliminated. NATO allies, however, said they would not get involved in Trump's blockade plan, proposing instead to intervene only once fighting ends.
"It has been days since Iran attacked its neighbors, and the U.S. and Israel have not attacked Iran. There may be a light at the end of the tunnel," Bob Yawger, director of energy futures at Mizuho, said in a note. "For now, the ceasefire holds, and the two sides are apparently still talking."
(REUTERS)
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