Shipping data showed a sharp drop in the number of vessels passing through the Strait of Hormuz on Sunday after Iran announced it had once again closed the waterway, accusing Israel and the United States of violating an interim peace deal, Reuters reported.
Crude Oil Price on June 22
Brent crude futures rose 54 cents, or 0.67%, to $81.11 a barrel, after briefly touching $82.30 in early trading. U.S. West Texas Intermediate (WTI) crude futures rose $2.02, or 2.64%, to $78.62 a barrel before the contract settled later on Monday. The more actively traded August contract rose $1.43 to $77.28 a barrel. US markets were closed for a holiday on Friday, leaving no settlement.
Adding to market uncertainty, US President Donald Trump threatened to strike Iran again, even as US Vice President JD Vance met Iranian officials on Sunday for the first talks under an interim deal. Tehran, meanwhile, said Washington had failed to honor its commitment to stop fighting in Lebanon.
Also read: Global markets today: Asian shares fall, oil rises on peace doubts
In Lebanon, an Israeli attack killed at least 20 people on Saturday, according to state news agency NNA. The attacks came a day after a ceasefire with Hezbollah came into effect in an attempt to stem months of escalating violence.
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Despite Monday’s gains, oil prices fell more than 8% last week amid expectations that cargo stranded inside the Gulf would be freed and that US sanctions on Iranian oil would eventually be lifted under the US-Iran deal.
Where are prices going?
Despite the recent drop in oil prices, fully reopening Hormuz is expected to be a complex process. That will require careful coordination of agreements on vessel movements, restarting of oil wells, infrastructure repairs and de-mining operations. Some shipowners are also wary of operating conditions in the Straits and the wider Persian Gulf.
Analysts note that global oil inventories were depleted during the extended disruption of shipping through the Strait of Hormuz and will take time to rebuild. Stockpiles may continue to decline before fresh Gulf supplies reach international markets.
Last month, Saudi Aramco Chief Executive Officer Amin Nasser warned that disruptions in the Strait of Hormuz could delay a return to stability in global oil markets until 2027. According to Nasser, a prolonged disruption could affect the supply of about 100 million barrels of oil per week. Saudi Aramco is the world’s largest oil producer.
Morgan Stanley described the oil market as a “race against time”, warning that some of the factors limiting price gains could weaken if the Strait of Hormuz remains closed until June.
The brokerage noted that higher US crude exports and softer Chinese demand have helped absorb part of the supply shock so far. However, he warned that global supplies could tighten again if disruptions to strategic shipping routes persist, especially outside periods during which the US and China are able to cushion the impact.
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