Hormuz Deadlock Pushes Oil Prices Closer to $120
Oil prices have been volatile in recent weeks due to tensions surrounding the Strait of Hormuz, a critical maritime chokepoint. Despite initial optimism about a quick agreement between Iran and the US, prospects for an imminent deal have faded.
An analysis by CNBC suggests that oil prices could rise further if the deadlock continues. Brent crude futures were trading around $88 per barrel on Tuesday, down from last month's peak of over $110 but still well below recent highs.
Energy markets are drawing short-term confidence from indications that negotiations between Iran and Oman over a temporary shipping route through the strait are continuing. However, analysts warn that this reaction will be 'time-sensitive' and may not last if the deadlock persists.
Kieran Tompkins, senior climate and commodities economist at Capital Economics, believes that oil prices could increase if traders are forced to ratchet up the implied chance of a prolonged closure. He predicts that front-month oil futures prices could rise, especially if attention on a 'tipping point' in the oil market is renewed.