Oil rises as fresh US, Iran confrontations ignite Middle East
Oil prices rose Monday after days of tit-for-tat strikes by the U.S. and Iran that highlighted the fragility of their interim peace deal and again slowed energy shipping through the Strait of Hormuz.
Brent crude futures were up 58 cents, or 0.8%, at $72.57 a barrel by 0207 GMT. U.S. West Texas Intermediate crude was at $70.11 a barrel, up 88 cents, or 1.3%.There is still a lot of risk in the oil industry. Still, participants seem to be preoccupied with the implications for the global balance of a continued recovery in oil flows,” ING analysts said in a note on Monday.This confidence is strange and plainly provides considerable upside risk if the supply recovery proves slow.”
Brent crude closed down 10.6% last week, its third weekly loss, after crude shipments through the strait increased last week to the greatest level since the U.S.-Israeli war on Iran started in late February.
But commerce has slowed anew since repeated attacks on ships in the strait from Thursday, including a Qatar-linked oil tanker, which prompted strikes from the U.S. and Iran in the sharpest escalation since they signed an interim peace pact.
Iran and the United States have agreed to end recent confrontations in the Gulf and resume discussions on their dispute over the Strait of Hormuz, a U.S. official said on Sunday, capping increases in oil prices.”Market will likely revisit its assumption of a quick recovery of oil supply from the Persian Gulf,” ANZ analysts said in a note.
Saudi oil company Aramco (2222.SE), opens new tab began crude oil loadings on Friday at its Ras Tanura terminal, west of the Strait of Hormuz, after they were stalled for nearly four months, as oil producers stepped up output and exports ahead of a temporary accord.
The loadings went on even after a helicopter owned by the firm crashed Sunday at Ras Tanura, killing 14 nationalities. The cause of the crash was unknown.Physical flows are constrained by tanker backlogs, infrastructure and production shut-ins. “It could take the rest of the year for supplies to get back to pre-conflict levels,” ANZ analysts warned.
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