Hormuz Strait Closure Pushes Oil Prices Towards $100
The global energy market is bracing for more turmoil as tensions between the US and Iran continue to escalate. The Strait of Hormuz, a critical waterway through which over a third of the world's oil supply passes, remains closed due to ongoing conflict. Only six vessels passed through the strait on Monday, a significant drop from the 10-day average of around 11.
US President Trump has demanded that Iran compensate those killed and seriously injured in the fighting, while Tehran has called for the US to compensate it for damages caused by the conflict. This cat-and-mouse game is not only affecting oil prices but also adding pressure on global energy markets.
The recent attacks on oil refineries in Russia and Saudi Arabia have further exacerbated the situation, driving up diesel prices in the US and Europe. This could lead to another wave of inflation, forcing central banks to keep rates higher for longer, bad news for equities, gold (XAUUSD), and bonds.
The strategic reserves are currently keeping oil prices from breaking decisively above $100 a barrel, but they are not unlimited. US strategic petroleum reserves have already fallen below 300 million barrels, their lowest level since 1983, from around 415 million barrels as of February 28.