Shafaq News
Oil prices climbed about 4% on Monday after the U.S. militarybegan a blockade of ships leaving Iran's ports, drawing threatened retaliationfrom Tehran against its Gulf neighbors after weekend talks on ending the Iranwar broke down.
Futures finished the day off earlier highs, in acontinuation of the volatility that has been a hallmark of oil trading sincethe U.S. and Israel jointly struck Iran on Feb. 28, kicking off a war that hasnow lasted more than six weeks.
While prices in cash markets continue to surge, futurestraders have been more guarded due to U.S. President Donald Trump'sunpredictable statements, which have vacillated from threats to expectations ofa 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 settleat $99.08. Earlier in the trading session, Brent was up more than $8 a barreland WTI was up more than $9.
The war has resulted in the largest-ever disruption ofglobal oil and gas supplies due to Iran's interruption of traffic through theStrait of Hormuz, which handles about 20% of global oil and liquefied naturalgas flows.
Trump on Monday said 34 ships had passed through the straiton Sunday, a figure Reuters could not verify. Normally, more than 100 vesselstransit 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 pricesare at their highest since the summer of 2022, following Russia's invasion ofUkraine.
Saudi Arabia said crude oil sales to China were set to fallin May, while European Commission President Ursula von der Leyen said member states must coordinate onenergy prices amid a 22 billion euro ($25.70 billion) increase in fossil fuelbills since the start of the war.
More countries have announced emergency support measures tocombat rising energy costs, while the Organization of the Petroleum ExportingCountries lowered its forecast for world oil demand in the second quarter by500,000 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 wouldnot be necessary.
Spot Crude At Records
In the spot market, prices for physical crude for immediatedelivery to Europe traded at record highs of around $150 a barrel.
"(If) Trump does indeed back his blockade threat withactual boats, a convergence between the paper and physical markets may sooncome," said Helima Croft, an analyst at RBC Capital Markets.
Trump warned that any Iranian "fast-attack" shipsthat go near a U.S. maritime blockade would be eliminated. NATO allies,however, said they would not get involved in Trump's blockade plan, proposinginstead to intervene only once fighting ends.
"It has been days since Iran attacked its neighbors,and the U.S. and Israel have not attackedIran. There may be a light at the end of the tunnel," Bob Yawger, directorof energy futures at Mizuho, said in a note. "For now, the ceasefireholds, and the two sides are apparently still talking."
(REUTERS)
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