- Trump Declares Iran “Finished” After Diplomatic Efforts Collapse
- Shipping Giants Warn Full Return To Region May Take Weeks
Oil prices climbed Friday, as a new diplomatic move toward peace between the United States and Iran was dimmed by fresh worries that supplies could be cut off by renewed tensions in the strategic Strait of Hormuz, after earlier hopes of a breakthrough.
Brent crude, the international oil benchmark, jumped 0.90 per cent to $80.57 a barrel as traders responded to the failure of planned talks between Washington and Tehran, while U.S. West Texas Intermediate (WTI) rose 0.91 per cent to $76.54 a barrel.
The surge in the market comes amid fresh worries about the security of one of the world’s most important energy shipping lanes, the Strait of Hormuz, through which almost a fifth of the world’s oil passes every day.
Oilprice.com reports that vessel-tracking data compiled by Bloomberg shows that traffic was reduced very sharply in the narrow waterway after talks between Washington and Tehran over the weekend stalled before formal talks began.
Nothing changed by the end of Friday morning as none of the oil tankers was seen leaving the Persian Gulf through the Strait, according to Bloomberg tracking data, as fears for a deal were temporarily assuaged by a 24-hour respite 24 hours earlier.
The sudden turnaround has once again raised concerns that rising geopolitical tensions could lead to further crude supply disruptions and volatility in energy markets around the world.
To add to the confusion, U.S. president Donald Trump took a defiant tone after the diplomatic failure.
But we didn’t meet for desperate reasons, Iran did. Iran is done! We will play out the 60 days. They don’t get any money, not ten cents!” Trump posted on his Truth Social app.
The remarks were seen as a further sign that relations between both countries might deteriorate, which could impact one of the world’s key oil transit corridors, market analysts said.
Maritime intelligence firm Windward noted that, prior to the uncertainty, tanker traffic had been resilient. The firm had the highest number of tanker transits in the Straits since the latest round in the regional crisis.
Windward also revealed that ships with an estimated 80 million barrels of crude oil were also getting ready to cross the route before new geopolitical conflicts arose.
But big global shipping companies are not optimistic.
However, shipping firms are not expected to quickly resume to normal in the region if tensions abate, warned Mitsui OSK Lines Chief Executive Officer, Jotaro Tamura.
With the events of the past couple of months, I think it’s fair to say it might take at least a couple of weeks, if not a month,” Tamura told the Financial Times.
The Middle East has again become the focus of global energy market fears as investors, governments and industry watch closely for further indications of increased tension.
The possibility of a long-term disruption in the Strait of Hormuz and its associated price hikes would have a wide-ranging impact on the economies of oil-importing countries already facing inflationary pressures and rising prices. The world is looking at more uncertainty in energy markets as diplomats begin to dial back communication and geopolitical tensions rise.
