Oil Prices Surge Amid Strait of Hormuz Disruptions
Oil prices surged on Monday as concerns about geopolitical risks intensified due to disruptions in shipping through the Strait of Hormuz. The Brent crude futures price rose by 1% to $89.40 per barrel and was last trading up at $89.20, while U.S. West Texas Intermediate crude futures increased by 44 cents to $82.83 a barrel.
The rise in oil prices comes after attacks on tankers operated by Abu Dhabi National Oil Company (ADNOC) in the Hormuz Strait and on a Saudi Aramco refinery last week. The incidents led to a 5% gain in both Brent and U.S. West Texas Intermediate crude futures.
Priyanka Sachdeva, head of market insights for Phillip Nova in Singapore, attributed the rebound in oil prices to fading hopes for a more permanent resolution between the US and Iran, as well as increased geopolitical risk premiums in the market.
However, Sachdeva cautioned that she sees limited upside in oil prices unless there is clear evidence of renewed aggression in the Strait of Hormuz, particularly material damage to tankers or oil infrastructure.