US to Extend Blockade on Iranian Ports, Driving Up Oil Prices
Oil prices surged by over 3% on Wednesday as concerns about prolonged disruptions to the Strait of Hormuz continued. The Brent contract rose to a one-month high, while US crude futures for June hit their highest since April 13.
The spike in oil prices was largely driven by reports that the US will extend its blockade of Iranian ports. According to the Wall Street Journal, President Donald Trump has instructed aides to prepare for an extended blockade, which would likely worsen supply disruptions and push oil prices even higher.
Analysts say that despite a ceasefire in the US-Israeli war with Iran, the conflict remains deadlocked, with both sides seeking a formal end. The prolonged disruption of energy flows through the Strait of Hormuz is expected to continue driving up oil prices.
In related news, the United Arab Emirates' surprise decision to quit OPEC was seen as having limited near-term impact on the market. However, analysts note that a resolution in the Gulf allowing for uninhibited energy flows through the Strait of Hormuz would be necessary before the UAE's output increase can come into effect.