US Secretary of State Rubio: Reiterates criticism against Iran’s toll plans near Hormuz
United States (US) Secretary of State Marco Rubio reiterates after meeting with leaders from Gulf nations that Iran’s toll system near the Strait of Hormuz, a vital passage to almost 20% of global energy supply, is unacceptable. Rubio also stated earlier in the day, "Hormuz tolling would set an unacceptable precedent." He also expressed that Gulf countries are not in favor of the recognition of Iran’s authority near Hormuz.
Remarks
Had a really good meeting with the Gulf countries.
We won't do anything that undermines Gulf partners.
Zero support among Gulf countries for tolling in Hormuz.
Iran MOU addresses interference in other countries.
Iranians will continue making maximalist announcements.
We look at actions, not rhetoric, from Iran.
A tolling system in Hormuz isn't even workable.
Fees' and 'tolls' are the same thing.
I'm not aware of Iran funds held by Qatar being transferred.
Reconstruction fund for Iran was not discussed with Gulf countries.
The Iranian system continues to be led by radical clerics.
Trump has multiple options if it doesn't work out with Iran.
Relationship with Oman is fine.
Omanis said they are not in favor of a tolling system for the Strait of Hormuz.
Market Reaction
No immediate response seen in oil prices. At press time, the WTI Oil price trades 0.3% lower to near $69.50.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
