Key Points:
- Oil prices rise for the fourth consecutive day.
- US and Iran remain in a stalemate over the Strait of Hormuz.
- Trump extends truce, but Iran has no immediate plans for talks.
- Iran’s gunboats fire on commercial ships in the strait.
Oil prices rose for a fourth straight day as the United States and Iran
continued their standoff over control of the Strait of Hormuz. The two nations
failed to meet for another round of peace talks, keeping tensions high and
pushing crude costs upward.
Brent crude, the global benchmark, traded near $104 a barrel, after climbing
almost 13% over the last three sessions. West Texas Intermediate, the US
benchmark, was around $95. US President Donald Trump stated that the truce
agreed upon on April 7 would stay in place indefinitely while Washington awaits
a new peace proposal from Iran. However, Tehran has said it doesn’t plan to
participate in negotiations anytime soon.
Global benchmark Brent briefly surged by as much as 4.2% early in the session.
However, it quickly reversed course after unconfirmed reports surfaced about
explosions in Iran, showing how sensitive the market is to any news from the
region.
The conflict has shaken energy markets since it began in late February. The
near-closure of the Strait of Hormuz has caused a sharp drop in oil flows from
major producers in the Persian Gulf. The US has kept its naval blockade on ships
going to and from Iranian ports, aiming to increase pressure on the Islamic
Republic. Iranian Foreign Minister Abbas Araghchi called this blockade a
violation of the ceasefire.
“Tensions are remaining high, and with the US and Iran currently at a stalemate
on agreements, until somebody flinches, the path of least resistance for prices
still looks higher,” said Dennis Kissler, senior vice president for trading at
BOK Financial Securities Inc. He added, “The longer no oil flows through the
strait, the higher we will go with prices.”
Washington and Tehran are still stuck on several other important issues,
including Iran’s nuclear program and Israel’s actions in Lebanon. Iranian
President Masoud Pezeshkian posted that while he welcomes talks, the “blockade
and threats are main obstacles” to diplomacy.
Iran continues to keep Hormuz closed to almost all other international shipping
traffic. On Wednesday, Iranian gunboats even fired on commercial ships in the
strait. Since the US naval blockade started earlier this month, American forces
have seized and boarded ships and turned back dozens of others.
Separately, traders also watched US oil inventory data released Wednesday by the Energy Information Administration. The report showed declines across all major refined product categories. The world has been relying on US supplies to make up for disruptions from the Middle East, and this increased demand pushed total US oil and fuel exports to a new record, according to the agency.
