Oil Prices Went Up More Than 7% to Over $100 Before The US Blocked Iran | Zarea Ltd

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Introduction - Oil Prices Surged $100 Per Barrel:

Following the failure of Washington and Tehran to strike an agreement to end the conflict, oil prices surged beyond $100 per barrel on Monday as the US Navy prepared to stop ships to and from Iran across the Strait of Hormuz, a move that might limit Iranian oil shipments.

• After closing 0.75% down on Friday, Brent oil futures increased $6.96, or 7.3%, to $102.16 a barrel by 04:30 GMT.
  
• After losing 1.33% in the previous session, US West Texas Intermediate was up $8.12, or 8.4%, at $104.69 per barrel.
  

Context of the Surge:

Driven by the realization that a precarious two-week truce had probably failed, the price surge reversed a modest dip from the previous Friday.

1) Impact on Supply: Experts caution that a total embargo may limit Iranian shipments of up to two million barrels per day.
2) Global Impact: As investors considered the possibility of persistently high energy prices and inflation, Asian stock indexes, notably Japan's Nikkei 225 and India's Nifty 50, fell precipitously on Monday.

Market Reaction & Key Benchmarks:

As the market prepared for major disruptions in the Strait of Hormuz, a crucial chokepoint for 20% of the world's oil supply, the statement caused a severe worldwide supply shock.

1) Brent Crude: Reached $101.91 per barrel, up $6.71 (7.05%).
2) West Texas Intermediate (WTI): Reached $104.16 per barrel after rising $7.59 (7.86%).
3) Daily Volatility: After the discussions broke down, some sources showed intraday jumps as high as 14%.

Blockading on The Strait of Hormuz:

According to Saul Kavonic, head of energy research at MST Marquee, "the market is now largely back to conditions before the ceasefire, except now the US will block the remaining up to 2 million barrels per day Iranian-linked flows through the Strait of Hormuz as well."

President Donald Trump raised the stakes on Sunday by announcing that the US Navy will begin blockading the Strait of Hormuz after protracted negotiations with Iran failed to produce an agreement to end the conflict, endangering a precarious two-week ceasefire.

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