(RTTNews) – Partially offsetting the losses from four previous sessions, crude oil prices have surged on Thursday as supply disruption threats reappear following a projectile hit on a cargo ship near Oman across the Strait of Hormuz.
WTI Crude Oil for August month delivery was last seen trading up by $1.49 (or 2.12%) at $71.83 per barrel.
After last Wednesday’s signing of Memorandum of Understanding between the U.S. and Iran, which offered both countries a 60-day period for peace talks, a high-level team comprising negotiators from both nations met in Switzerland to discuss a framework for future negotiations.
Leaders from the U.S. and Iran remarked that the talks went on progressively.
Soon after the signing of the MoU, Iran reopened the critical Strait of Hormuz leading to active shipping traffic. As supply disruption concerns eased, oil prices declined over the past few days.
According to the MoU, over the coming days, Iran must clear the sea mines it had laid across the Strait of Hormuz during the conflict. Vessels are travelling through designated routes to avoid detonation risks.
More ships are passing through the strait but still not near the pre-war levels. While outbound flows, i.e., ships exiting the strait has increased, inbound flows are yet to resume briskly.
Today, the U.K. Maritime Trade Operations center announced that a Singapore-flagged container, Ever Lovely, traveling through a new U.N. backed route was struck by an unknown projectile on the starboard side. The attack came 7.5 nautical miles southeast of Dahit, in Oman’s Musandam exclave.
Though no casualties or environmental damages were reported, the ship sustained damage to its bridge. Following this, UKMTO advised vessels to pass through this area with caution.
Iranian military had earlier threatened ships not to travel through the strait without its permission.
Today, the U.S. Secretary of State Marco Rubio met with officials from Bahrain during his trip to the Middle East and announced that the six-nation Global Cooperating Council have expressed “zero support” for any toll or fee on the Strait of Hormuz shipping traffic.
In the U.S., a resolution to curb the powers of U.S. President Donald Trump on starting a war with Iran was effectively rejected by the U.S. Senate. While commenting on this through Truth Social, Trump remarked that this puts Iran on notice.
According to a Reuters’ analysis of ship-tracking data, oil exports from the Middle East are set to jump by 20% from May to around 508,000 barrels per day.
Even then oil levels would take months to reach the pre-war status anytime soon, according to experts.
Yesterday’s data from the U.S. Energy Information Administration showed that the U.S. crude oil inventories decreased by 6.1 million barrels for the week ending June 19, bringing commercial stockpiles to 412.1 million barrels.
In a related development, reportedly Iraq is contemplating exit from the Organization of the Petroleum Exporting Countries if it is not allowed to increase its production quota. Iraq being the second-largest oil producer in the group, its exit could diminish OPEC’s influence on global energy markets.
A few months before, the United Arab Emirates exited from the OPEC alliance due to disagreements on target allocations.
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