Trump's Iran blockade drives Brent to US$126 in Us-iran News
Brent crude jumped to US$126 a barrel in early London trading as reports that the U.S. is considering new attacks on Iran sent us-iran news into the oil market. Traders then pared the price back to US$116, but the two-day rally still left prices up about 13 per cent.
Trump's blockade and Hormuz
President Donald Trump warned that his blockade of Iranian ports could last months and told Axios that he plans to keep the U.S. blockade of Iranian ports intact. The Strait of Hormuz has been almost totally closed since Feb. 28, when the U.S. and Israel began their bombing campaign against Iran.
Iran mined the strait and attacked some ships in response. Hormuz, through which 20 per cent of the world’s oil and liquefied natural gas shipments pass, has been mostly closed since the war began, removing about 20 million barrels a day of oil from the Persian Gulf.
Brad Cooper's Thursday briefing
Axios reported late on Wednesday that U.S. Central Command has drawn up a plan for short and powerful strikes on Iran that could include infrastructure targets. Admiral Brad Cooper is due to brief Trump on Thursday, and that sequence keeps the military options tied directly to the next White House decision.
Robert Rennie, head of commodity research at Westpac Banking Corp, said, "Trump has ripped away the security blanket the market was clinging to — the hope that the war was about to end" and "Traders are now being forced to confront a much uglier reality: both sides still think they are winning, neither side has a clear incentive to negotiate, and energy prices are starting to accelerate higher."
Oil Markets and Inflation
The last time oil went above US$120 was in March 2022, during the early stages of Russia’s invasion of Ukraine. Oxford Economic said oil prices could go to US$190 a barrel if Hormuz remained shut for six months, a risk that would tighten supply further while high prices continue to stoke inflation and hurt growth.
The ceasefire in place since April 8 has not reopened the strait, so the next pressure point is whether Trump follows through after Cooper's briefing on Thursday and whether the blockade of Iranian ports stays in place long enough to keep crude pinned near its wartime high.
