Oil Prices Surge 6% Amid Worsening US-Iran Relations
Oil Prices Surge 6% as Uncertainty Over US-Iran Peace Talks Intensifies
New York, April 20 (Reuters) - Oil prices witnessed a significant jump of around 6% in Monday trading due to uncertainty surrounding the peace talks between the United States and Iran, following a surge in violence around the Strait of Hormuz.
The price of Brent crude futures settled at $95.48 a barrel, a 5.64% increase of $5.10 from the previous day's close. U.S. West Texas Intermediate advanced to $89.61, a 6.87% hike of $5.76 from the previous day.
The recent developments have heightened concerns over a resumption in hostilities, casting doubts over the prospects for a second round of talks between the U.S. and Iran in Pakistan. Iran is considering attending the peace talks, but no decision has been made, a senior Iranian official told Reuters on Monday.
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| Contract | Previous Close | Current Close | Percentage Change |
|---|---|---|---|
| Brent Crude | $90.38 | $95.48 | 5.64% |
| U.S. West Texas Intermediate | $83.85 | $89.61 | 6.87% |
The two-week ceasefire set to expire later this week has generated concerns over the diplomatic process. Iran's Foreign Minister Abbas Araqchi told his Pakistani counterpart Ishaq Dar that the U.S. "continued violations of the ceasefire" are a major obstacle to the continuation of the diplomatic process.
The blockade in the Strait of Hormuz, which handles roughly one-fifth of the world's oil and liquefied gas supply, remained at a virtual standstill on Monday, with only three crossings in the past 12 hours, shipping data showed. Nikos Tzabouras, market analyst at Tradu, noted that the strait remains under a double blockade, which can push crude prices even higher.
Despite the uncertainty, analysts believe that oil prices are off the highs seen at the beginning of the Middle East conflict. "As long as we don't have full-scale warfare, my feeling is that we're going to slowly but steadily grind lower," said Bob Yawger, director of energy futures at Mizuho.
Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
Investor Takeaway
Investors should be cautious of potential market volatility due to escalating tensions between the US and Iran.
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