Share this @internewscast.com
The global energy sector is reeling from the closure of the Strait of Hormuz, a critical passage for oil and gas tankers, as the ongoing conflict in the Middle East escalates into an energy crisis.
In recent developments, oil prices surged on Wednesday. This spike was influenced by the unexpected departure of the United Arab Emirates from OPEC and the grim expectations that the conflict involving Iran will not conclude soon.
Brent crude, the international oil benchmark, experienced a 3% increase, trading at $114.64 per barrel for June delivery by 6:00 a.m. ET. This marks an extension of gains following seven consecutive positive trading sessions, an indicator of the market’s volatility amidst the geopolitical tensions.
Similarly, the U.S. benchmark, West Texas Intermediate (WTI), saw its futures rise by 3.6%, reaching $103.54 per barrel. WTI has been on an upward trajectory, posting over a 49% increase since the conflict, led by the U.S. and Israel against Iran, erupted on February 28.
The latest uptick in oil prices is also fueled by news that the U.S. intends to extend its blockade of Iranian ports. This move has heightened concerns about extended disruptions through the Strait of Hormuz, a strategic chokepoint for global oil shipments.
The latest move higher comes amid reports that the U.S. will look to extend its blockade of Iranian ports, deepening fears of prolonged disruption through the strategically vital Strait of Hormuz.
President Donald Trump will seek to ratchet up the pressure on Iran’s economy and oil exports by preventing shipping to and from its ports, the Wall Street Journal reported Tuesday, citing U.S. officials.
The U.S. president on Wednesday threatened Iran in a Truth Social post, saying the country “better get smart soon!” and accusing Tehran’s leadership of failing to “get their act together.”
Attempts to continue negotiations to end the war appeared to have stalled in recent days.
Energy market participants were also digesting the ramifications of the UAE’s abrupt decision to quit OPEC, although analysts said the move was likely to have a limited market impact given the ongoing Middle East crisis.
Strategists at Dutch bank ING said in a research note published Wednesday that the UAE’s exit from the oil producer group represents “a big blow” to OPEC and would certainly be welcomed by Trump “as it erodes OPEC’s influence in the oil market, while it should also be beneficial for importers and consumers.”
“However, in the near term, the biggest driver for oil prices remains developments in the Persian Gulf and the timing of a resumption in oil flows through the Strait of Hormuz,” they added.
