|

Oil: Hormuz tensions drive price surge – ING

ING strategists Warren Patterson and Ewa Manthey highlight sharply higher Oil prices as US–Iran tensions escalate and vessel traffic through the Strait of Hormuz slows. They note ICE Brent has jumped back above $83/bbl, with risks around attacks, renewed US blockade on Iran, and competing toll proposals from Iran and President Trump adding significant uncertainty for energy markets and shipping costs.

Brent rallies on Hormuz disruption

"Oil prices surged yesterday, with ICE Brent settling 9.6% higher on the day — back above $83/bbl. This strength has continued into early morning trading today, with little sign of easing tensions between the US and Iran."

"The US continues to say that the Strait of Hormuz is open. But given the growing risk of attack, these comments will offer little comfort to ships."

"The other layer of uncertainty for markets is the cost of navigating the Strait of Hormuz. It's well-telegraphed that Iran is insisting on charging a toll."

"But President Trump said that the US will charge a fee equivalent to 20% of a cargo's value for providing safe passage for vessels. There are few details on how this would work—or how serious Trump is about it."

"A 20% fee on a VLCC that carries 2m barrels at $80/bbl, would be equivalent to around $32m or an additional cost of $16/bbl. This is significantly higher than the $1/bbl toll for which Iran has been pushing."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

AUD/USD remains below 0.7000 amid light trading

AUD/USD fills a modest bearish gap on Monday, but remains below 0.7000 in the Asian session amid holiday-thinned liquidity. The US Dollar attempts a bounce even as US bond yields pull back from multi-year highs, limiting the pair. Moreover, diminishing odds of another RBA rate hike in November cap the Aussie.

USD/JPY hovers above 158.00 amid Japan/ US holiday

USD/JPY extends its range-bound price action into a new week, trading above 158.00 as bulls remain on high alert amid speculation that authorities will step in to prop up the Japanese Yen. Meanwhile, softer US bond yields keep US Dollar bulls on the back foot and cap the pair's upside. However, geopolitical uncertainties could limit losses for the safe-haven buck amid thin liquidity due to a holiday in Japan and the US.

Gold sticks to modest losses; seems vulnerable below $4,200 on Fed hike bets

Gold extends its intraday retracement slide from a one-week high, hitting a fresh daily low around $4,170 during the early European session. The US Dollar attracts fresh buyers after a modest downtick amid the US Federal Reserve's hawkish outlook, which, in turn, is seen as weighing on the non-yielding bullion.

Bitcoin struggles as ETF outflows, geopolitical uncertainty weigh

Bitcoin hovers around $83,600 on Monday after a 3.1% correction last week. US-listed spot ETFs recorded an outflow of $681.10 million last week, snapping the three-week inflow streak. Geopolitical uncertainty and mixed signals keep investors cautious.

The week ahead: A critical week as earnings and CPI test market

The Oil price is relatively stable this morning, and US and European stock markets are poised to open higher, as risk sentiment shrugs off an escalation in the Middle East and concerns about rising bond yields.

Has Bitcoin really escaped the macro forces it was built to fight?
Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?