A rise was seen in the international oil market on Monday. Both Brent crude and WTI rose more than 5% as fears of a ceasefire between the US and Iran increased. By 0418 GMT on April 20, Brent crude futures rose $5.08 (5.62%) to $95.46 a barrel, while US WTI crude rose $5.01 (5.97%) to $88.86 a barrel. There is a fear that if the tension increases further, then the price of crude oil may rise again in the coming days.
What is the reason?
The US on Sunday seized an Iranian cargo ship accused of breaking the blockade. Iran has warned of retaliation. Along with this, the traffic through the Strait of Hormuz has almost come to a standstill, due to which the fear of supply disruption in the market has increased. Both oil contracts fell a massive 9% on Friday, the biggest one-day decline since April 18. That day, Iran claimed that the Strait of Hormuz would remain open to all commercial shipping for the remainder of the ceasefire and President Donald Trump said that Iran had agreed to never close it again. But after just 24 hours the situation reversed.
What do analysts say?
According to investing news, experts say that just 24 hours after this announcement, the Islamic Revolutionary Guard Corps opened fire on some tankers. This has again created fear among ship owners. The fundamental conditions of the market are deteriorating. 10-11 million barrels of crude oil per day is still stranded. Another expert said that the oil market is reacting to the social media posts of America and Iran instead of the ground reality. The reality is that it is difficult to restore oil flow quickly. The opening of the Strait of Hormuz was announced ahead of time. He also says that shipowners will not take risks again until they are confident that the route is truly safe.
present situation
Iran has decided not to participate in the second round of talks. The US continues its blockade of Iranian ports. Iran first lifted its blockade on Hormuz and then reimposed it. Before the war, about 20% of the world’s oil supply passed through the strait. More than 20 ships (carrying oil, LPG, metals and fertilizers) passed through the Strait of Hormuz on Saturday, the highest number since March 1.
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