(April 20): Oil soared after the US Navy seized an Iranian ship during a chaotic weekend that saw Tehran firing at vessels and reimposing controls in the Strait of Hormuz just hours after opening the waterway.
Brent jumped as much as 7.9% to US$97.50 a barrel, after falling more than 9% on Friday on signs of a thaw in the conflict, while West Texas Intermediate traded near US$90. Tehran on Saturday again closed the vital chokepoint, after it said a US blockade of ships that left Iranian ports violated a ceasefire agreement that ends Tuesday.
President Donald Trump said the US Navy fired upon and seized the ship in the Gulf of Oman after it failed to heed warnings to stop as it left the Strait of Hormuz, the first major encounter in the week-old blockade. The incident came hours after a back-and-forth over potential peace talks in Islamabad, with Trump saying he saw a chance for a deal and Iranians saying there was no “clear prospect” for an agreement.
“The hopes that the war was nearing a conclusion have evaporated over the weekend,” said John Kilduff, a partner at Again Capital. “The Strait of Hormuz never opened, and the amount of disrupted supply continues to grow by the day.”
The standoff over Hormuz — through which about a fifth of the world’s oil and liquefied natural gas flowed before the US-Israeli war on Iran began at the end of February — threatens to deepen the global energy crisis and is undermining Trump’s weekend prediction of a quick end to the conflict. The waterway is just one of the unresolved issues, which also include Iran’s nuclear capabilities and Israel’s ongoing invasion of Lebanon.
The conflict has triggered an unprecedented supply shock, intensifying inflationary pressures and weighing on worldwide economic growth. The cumulative global impact of the war will begin to emerge this week, with business surveys from multiple countries potentially flagging risks of stagflation.
See also: Oil holds gains as Trump extends truce but maintains blockade
Uploaded by Isabelle Francis
