Brent hits a one-month high on concerns about the long-term disruption of Hormuz
* Benchmarks in a multi-day rally during the closure of the Strait of Hormuz
* UAE OPEC exit likely to boost near-term supply, analysts say
* US to extend Iran port blockade, WSJ says
* The US word list falls for a second week
LONDON, April 29 (Reuters) – Oil prices rose 3% on Wednesday, with the Brent contract hitting a one-month high, after media reports said the US would extend its blockade of Iranian ports, potentially increasing supply disruptions from the Middle East producer region.
US President Donald Trump has ordered aides to prepare for a long-term blockade of Iran, the Wall Street Journal reported late Tuesday, citing US officials. Trump will choose to continue to suppress Iran’s economy and oil exports by blocking shipments to and from its ports, the report said. Despite a ceasefire in the US-Israeli war with Iran, the conflict is over as both sides seek to formally end hostilities.
Brent crude futures for June delivery rose $3.33, or 3%, to $114.59 a barrel at 1004 GMT, rising for an eighth day to their highest since March 31. The June contract expires on Thursday and the most active July contract was at $107.43, up 2.9%.
US West Texas Intermediate (WTI) futures for June delivery rose $3.55, or 3.6%, to $103.48 a barrel, the highest since April 13. The contract has risen for seven of the last eight days.
“The recent increase in oil prices has been driven by the Strait embargo. If Trump is ready to extend the embargo, the supply disruption will worsen and continue to increase oil prices,” said Yang An, an analyst at Haitong Futures. Abu Dhabi National Oil Company has notified some customers that it may load two crude oil out of the Gulf next month as the Strait of Hormuz remains closed, according to two people with knowledge of the matter and the notice reviewed by Reuters. Investors were also assessing the implications of the United Arab Emirates’ surprise decision to quit OPEC.
Analysts did not expect any major immediate impact on the market from the move.
“The United Arab Emirates’ exit from OPEC+ formalizes the organization’s weak cohesion, but the near-term impact is limited,” ANZ Research said in a note. “The move reflects long-term share tensions, but prices are still driven more by geopolitics, inventories and materials and equipment than institutional changes.”
There must be a decision in the Gulf that allows unrestricted energy to flow through the Strait of Hormuz and before the UAE’s production increase can take effect, ING analysts wrote in a note on Wednesday.
In the medium to long term the UAE’s decision means more supply to the market, suggesting that Brent’s forward curve should go deeper into reverse, ING analysts said.
Market participants are awaiting data from the US Energy Information Administration on collections. The American Petroleum Institute reported on Tuesday that crude oil prices fell for a second week. (Reporting by Stephanie Kelly in London, Sam Li in Beijing and Siyi Liu in Singapore; Editing by Clarence Fernandez, Jane Merriman and Keith Weir)
Goods Market News Oil and Gas Government and Politics
