NEW YORK, July 14 — Crude oil futures prices surged over 9 percent on Monday after U.S. President Donald Trump said that the United States was reinstating a naval blockade on Iran in the Strait of Hormuz.
The West Texas Intermediate for August delivery increased by 6.73 U.S. dollars, or 9.42 percent, to settle at 78.14 dollars a barrel on the New York Mercantile Exchange. Brent crude for September delivery gained 7.29 dollars, or 9.59 percent, to settle at 83.30 dollars a barrel on the London ICE Futures Exchange. “We are reinstating the THE IRANIAN BLOCKADE, so named because it is only stopping Iran’s ships or customers from entering or leaving,” Trump wrote on Truth Social. Traffic through the strait has plummeted as renewed strikes between the United States and Iran heightened safety concerns. Maritime data firm Kpler said 14 ships transited the strait on Sunday, the fewest in a month. “What we are witnessing is more than just a short-term technical rebound. It represents a clear re-pricing of geopolitical risk within the energy market,” Rania Gule, market analyst at online trading platform XS.com, said in a note.
The market has reacted not only to military developments but also to the growing possibility of disruptions to oil flows, according to Gule. Prices are likely to remain well supported as long as geopolitical tensions persist and no meaningful diplomatic breakthrough emerges, said Gule. The world’s oil reserves have been significantly depleted by the previous blockade of the Strait of Hormuz, and another blockade could serve as a serious bullish catalyst for oil prices, quickly pushing them towards levels seen in April and May, said Vladimir Zernov, analyst with market information supplier FX Empire.
Xinhua
