Oil prices increased by more than one percent during early trading on Monday, attributed to a slowdown in tanker traffic thru the Strait of Hormuz over the weekend. This development occurs amidst the absence of a peace agreement between the United States and Iran, leaving the conflict in the Middle East unresolved. Brent crude futures increased by 60 cents, representing a 0.7% rise, reaching $89, whereas U.S. West Texas Intermediate crude futures decreased by 40 cents, settling at $83 per barrel. Both benchmarks experienced an increase exceeding 5% last week following assaults on tankers managed by Abu Dhabi National Oil Company in the Strait of Hormuz, as well as an attack on a Saudi Aramco refinery.
Over the weekend, Iranian Foreign Minister Abbas Araqchi stated that Iran had not made a decision regarding the resumption of talks with the U.S. Meanwhile, U.S. President Donald Trump urged Americans to tolerate marginally increased petrol prices as the conflict persists. Shipping thru the Strait of Hormuz experienced a slowdown over the weekend in the aftermath of the tanker attacks, as indicated by the data. Kpler shiptracking data indicated that five commodity vessels transited the strait on Saturday, whereas no vessels were recorded on Sunday. That compares with 31 vessels during the prior weekend.
The United Arab Emirates has accused Iran of launching an attack on a third vessel operated by ADNOC as it was transiting the strait on Friday, as reported by the Emirati state news agency WAM. The UAE previously attributed responsibility to Iran for two additional incidents concerning ADNOC vessels in the strait on Thursday evening. The duration of the disruption will be pivotal for the forecast of crude prices. JPMorgan posits that each supplementary month of disruption may contribute approximately $7 to $8 per barrel to Brent prices. If the disruption persists for three months, the bank anticipates average monthly Brent prices to approximate $114 per barrel.
Goldman Sachs has issued a cautionary note indicating that Brent may escalate to $120 a barrel should shipping disruptions persist thru the Strait of Hormuz, which is recognised as the most critical oil transit route globally. Goldman Sachs anticipates that tensions in the Middle East will ultimately diminish in line with its base case scenario. The bank forecasts Brent to average $80 a barrel in the fourth quarter and $75 a barrel next year. It was noted that risks continued to be skewed toward the upside, as disruptions in the Strait of Hormuz and the Red Sea might persist longer than anticipated.
