Crude Oil Prices Maintain Weekly Gains Amid Reports of Successful Iran Blockade Implementation

Global Oil Prices Surge Amid Ongoing Iran-US Tensions

Oil prices continued their upward trend for the second consecutive week, with Brent for July rising above $111 a barrel and West Texas Intermediate nearing $106 a barrel. This week's gain of 12% marks an increase in oil prices, fuelled by ongoing tensions between the US and Iran.

The deadlock in negotiations has resulted in the near-total closure of the Strait of Hormuz, a crucial waterway that carried about a fifth of the world's crude before the war. The uncertainty over future supply has led to sharp price swings, and a flattening of the futures curve. Oil prices have soared more than a quarter over the past two weeks, as the deadlock in negotiations extends the closure of the waterway.

Global Oil Prices Comparison

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Volumes were below normal in Asian trading, with many nations closed for Labor Day, including China, Singapore, Germany, France, and Brazil. Japan's top currency official has maintained that authorities in Tokyo are ready to intervene in the crude oil futures market, where speculative moves have been affecting the currency.

ConocoPhillips has warned of imminent "critical shortages" of oil for some nations as the war enters its third month. The supply pinch appears likely to significantly worsen as soon as June, according to Chief Financial Officer Andy O'Brien. The gap between paper and physical prices is narrowing as tangible domestic tightness begins to materialize for the first time since the war began. US crude exports surged to a record last week as global buyers tapped American producers for barrels to replace lost supply from the Middle East.