Oil jumps amid fears of prolonged disruption in Strait of Hormuz
Impact of the escalating US-Iran conflict is also being felt in the gas market
Oil jumped more than 9 per cent on Monday after the US launched waves of attacks on Iran, and Tehran said it had closed the Strait of Hormuz again.
Brent, the benchmark for two thirds of the world’s oil, rose $7.29, or 9.59 per cent, to $83.30, while West Texas Intermediate crude settled up $6.73, or 9.42 per cent, to $78.14 a barrel.
"Recent attacks highlight how uncertain Gulf exports remain and a serious re-escalation could reintensify the short-run upside risk to oil prices," Goldman Sachs said in a note.
The US is also set to reinstate the naval blockade on July 14 at 8pm GMT, according to the Joint Maritime Information Centre.
The International Energy Agency flagged a potential supply risk in its latest monthly market report. Global supply rebounded by 4.1 million barrels per day in June to 98.8 million bpd as traffic through the Strait of Hormuz partially recovered, the Paris-based agency said. Global oil output remained 9.4 million bpd below the levels recorded before the war began in February.
"Renewed exchanges of fire in the Gulf this week highlight the risks of not reaching a lasting peace agreement, which is a must for the normalisation in oil markets," the agency said.
The effects of the latest escalation are also being felt in gas markets, Eric Yep, Asia energy news editor at S&P Global Commodity Insights, wrote in a note on Monday. About a fifth of the world's liquefied natural gas (LNG) supply transits through the strait, almost all of it from Qatar. The country's Al Rekayyat LNG carrier was struck on July 7, prompting the first round of attacks last week.
The steady escalation and conflicting claims over shipping in the strait "will continue to be bullish for Platts JKM, NWE LNG and gas hub prices, especially if strikes start to target broader oil and gas infrastructure in the region", he added. Platts JKM is S&P Global's Asian LNG benchmark, NWE LNG refers to spot cargoes delivered to north-west Europe and gas hub prices are wholesale spot prices at hubs such as the Dutch TTF.
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