Oil Prices Rise as Tensions between US and Iran Escalate
Oil prices have risen for a second consecutive week due to ongoing tensions between the US and Iran, which are limiting supply. The Brent crude benchmark has gained over 6% this week, while WTI has risen 5.3%. This comes after the US threatened to impose its toughest sanctions yet on Iranian oil exports.
ANZ analyst Soni Kumari attributed the rise in prices to the 'very firm stance' taken by the US against Iran, with a naval blockade in place and threats of further sanctions. Crispus Nyaga, research analyst at Empire FX, noted that while the immediate impact on supply may be limited due to existing constraints on Iranian exports, an increase in shipping incidents or retaliation could exacerbate the situation.
The Strait of Hormuz has seen a significant decrease in traffic, with only seven commodity ships passing through it on Thursday compared to 14 the previous day. This is a concern as the waterway handles about a fifth of global oil and liquefied natural gas supplies. The situation remains uncertain as the US-Iran peace deal expired this week without any efforts to restart talks.