South Korean traders operate in front of screens at the Hana Bank in Seoul, South Korea, on Monday. Jeon Heon-Kyun/EPA/Shutterstock
Oil prices are rising due to renewed worries about the security of navigating the Strait of Hormuz after Iran’s navy asserted it halted two US vessels from accessing the route.
Brent crude, the international oil standard, has risen 3.8% to $112.3 per barrel. WTI, the American benchmark, has risen by a comparable amount to $105.6 per barrel. (Oil is traded through futures contracts, which are agreements to buy or sell at a predetermined price on a future date.) The WTI price on Monday indicates oil scheduled for June delivery, while Brent indicates oil set for July delivery.
Oil prices fell momentarily on Monday after the White House revealed a strategy to direct vessels through the Strait of Hormuz. US Central Command stated it would “assist merchant ships aiming to navigate freely through the crucial international trade route.”
Nonetheless, doubts persist regarding whether a US naval escort will be adequate to facilitate the passage of oil tankers through the strait in significant numbers. Currently, crude oil prices indicate “not only disruption, but the potential for prolonged disruption,” says Stephen Innes, managing partner at SPI Asset Management. “Washington and Tehran are engaged in a confrontation that resembles less diplomatic negotiations and more a challenge between two central banks waiting for the other to budge,” he noted in a message on Monday.
At the same time, US stock futures indicate a slightly lower opening, with key stock indexes also down in Paris and Frankfurt. In Asia, South Korea’s Kospi finished 5% up on Monday due to a surge in semiconductor firms. Today, stock markets in Japan, China, and the United Kingdom are closed due to public holidays.
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