Crude oil price increases by over 5% on Monday amid growing tension between the US and Iran, which could get worse again. The concern rose after the U.S. seized an Iranian cargo ship, raising fears that the fragile ceasefire between the two countries might break down.Â
On the other hand, transit through the Strait of Hormuz was restricted. This route is very important because a large share of the world’s oil passes through it. Brent crude oil increased its price by $4.81, bringing its total to $95.19 per barrel, while US West Texas Intermediate crude oil increased its price by $4.96, making it $88.81 per barrel. A couple of days before prior to this, crude oil prices had fallen by approximately 9% following statements by Iran that tankers would be allowed to pass through the strait under a ceasefire agreement.
But this was only temporary; there were reports that said some of the oil tankers had been attacked by Iran’s Revolutionary Guard, causing concerns among those running the ships about the safety of the passage. According to experts, the instability is far from over. The production of 10 to 11 million barrels of oil per day remains shut down, which is putting pressure on supply.Â
It is stated that the United States captured the ship because it violated the blockade. In return, Iran threatened to respond and also indicated that it would not attend the meetings proposed by the United States before the end of the ceasefire.
The two countries have been applying and lifting sanctions in the area, causing chaos and uncertainty. Oil prices are currently responding instantly to any news or statements, including social media posts, as opposed to any fluctuations in supply.
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While over 20 ships have made their way through the channel, several shipping firms have opted to wait for further signals confirming that it was safe for them to resume operations.
