The price of Brent crude jumped 7.9 percent, offsetting most of Friday’s drop after the announcement that ship traffic through the Strait of Hormuz had resumed.
European gas jumped 11%. Tehran shut down the crossing. It did so again Saturday after it said the U.S. blockade of Iran-linked ships violated a cease-fire agreement that expires Tuesday.
“The market still retains a risk premium ahead of the deadline but is not yet fully prepared for it,” he said. Haris Khurshid, chief investment officer at Karobaar Capital, said. “If things continue in the same direction, you are likely to see a gradual rise to around $105-115, but with constant fluctuations as a reaction to news headlines.”
Conflict escalation
At least 13 oil tankers had passed through the Strait of Hormuz as of Sunday, according to ship movement tracking data compiled by Bloomberg. On Saturday, at least 13 tankers turned back toward the Persian Gulf, abandoning attempts to leave the strait.
The conflict has triggered an unprecedented supply shock, adding to inflationary pressures and weighing on global economic growth. The effects of the war will begin to become clearer this week, as cross-country business surveys potentially point to risks of stagflation.
“As long as fuel flows around the Strait of Hormuz remain constrained, prices will be driven by the physical market rather than paper benchmarks, and real fuel costs are likely to remain under sustained upward pressure,” said Robert Rennie, head of commodities and carbon research at Westpac Banking Corp. in a survey.
