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Oil futures rise as Iran fires at ships, U.A.E.

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Published04 MAY 26 - 15:12 Reading time  minutes

“Crude futures are waking up to protracted Strait of Hormuz closure. The chances for a strong rebound in transits still seem remote. Chances for conflict escalation are growing.”

  • Expert: June Goh (Senior Oil Analyst, Sparta)
  • Publication: Reuters
  • Market Focus: Fuel Oil, Crude Trade Flows, Refining Economics, Singapore Market
  • Geographies: Singapore, Middle East, Asia

In a recent note cited by the Wall Street Journal, Sparta Commodities flags that crude futures are finally pricing in a protracted Strait of Hormuz closure, with the chances of a strong rebound in transits remaining remote. Brent settled up 5.8% at $114.44 on May 4 as Iran fired missiles and drones at the UAE and ships in the strait, while U.S.-Iran negotiations failed to produce a breakthrough. The risk of further escalation is growing, not receding. Traders should watch whether Project Freedom — the U.S. plan to guide vessels out of the Persian Gulf — shifts market sentiment or whether the geopolitical risk premium continues to build.

[Read Sparta Commodities’ full market commentary in the Wall Street Journal]

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