Oil prices experienced a rebound exceeding 6% on Monday, following a decline of over 9% on Friday. This volatility was prompted by reports of the closure of the Strait of Hormuz, as both the U.S. and Iran accused each other of breaching their ceasefire agreement through attacks on vessels over the weekend. Brent crude futures experienced an increase of $6.11, reflecting a rise of 6.76%, reaching $96.49 per barrel by 2327. Meanwhile, U.S. West Texas Intermediate rose to $90.38 per barrel, up by $6.53, or 7.79%.
The U.S. military has captured an Iranian cargo vessel attempting to breach its blockade, as stated by U.S. President Donald Trump on Sunday. In response, Iran announced its decision to abstain from a second round of peace negotiations, despite Trump’s warning of potential renewed airstrikes. The United States has sustained a blockade of Iranian ports, while Iran has alternately lifted and reimposed its own blockade of the Strait, which managed approximately one-fifth of the global oil supply prior to the onset of the war nearly two months ago. Oil markets persist in their fluctuations, reacting to the erratic social media communications from the U.S. and Iran, rather than the underlying conditions that continue to hinder a swift resumption of oil flows,” stated Saul Kavonic.
Both contracts experienced their most significant daily declines since April 18 on Friday, following Iran’s announcement that the passage for all commercial vessels through the Strait of Hormuz was open for the duration of the ceasefire period. Additionally, Trump stated that Iran had consented to never close the strait again.The declaration regarding the opening of the Strait was deemed hasty, according to Kavonic.
Ship owners are likely to exercise considerable caution before navigating the Strait again, unless they are provided with significantly greater assurance that any declared passage is genuine. On Saturday, over 20 ships traversed the strait, transporting oil, liquefied petroleum gas, metals, and fertilizers, according to data. This marks the highest volume of vessels navigating the waterway since March 1.