Iran continues to block the Strait of Hormuz, which keeps oil prices high

The lack of a deal with Iran to unblock the Strait of Hormuz, which Trump has repeatedly announced, and Iran's constant attacks on tankers keep oil prices high.

 

October Brent crude futures rose 6% last week to $88.5/barrel (+2.9% month-on-month), but their further growth was limited by information about the continued transit of oil through the Strait of Hormuz.

 

Meanwhile, the US continues to block Iranian oil exports in an attempt to force it to negotiate under pressure from a growing domestic financial crisis. But that could take months, and Trump needs results before the fall Senate elections.

 

An Iranian military spokesman said Thursday that no ship can safely pass through the Strait of Hormuz without Iran’s permission and supervision, and that President Trump’s claims of control over the strait are “just lies.” Iran’s statement came in response to President Trump’s comment that the United States has “full control over the Strait of Hormuz” and that “it belongs to us.”

 

On Thursday evening, Iran attacked two UAE oil tankers and on Saturday, another UAE tanker, which were passing through the Strait of Hormuz. Thus, Iran continues to block the movement of ships in the Strait of Hormuz and put pressure on the United States. In addition, Iran is pressuring its Gulf neighbors to abandon cooperation with the United States and regulate the transit of oil directly with Iran.

 

The United Arab Emirates, Iraq, Qatar and Kuwait are continuing to export oil through the Strait of Hormuz using tankers with their transponders turned off, according to ship tracking data compiled by Bloomberg, as well as information from Kpler and Vortexa. The sources said the volume of such shipments exceeds 4 million barrels per day. Energy Aspects reported on Monday that only five ships are passing through the strait on average per day, compared with 14 ships per day when the United States and Iran reached a memorandum of understanding in June.

 

Yemeni Houthis launched missile and drone strikes on the city of Marib and the Saudi coastal city of Al-Maha on the Red Sea coast over the weekend, killing four people and wounding eight others.

 

We believe that Iran will continue to attack ships in the Strait of Hormuz, so oil prices will remain at $75-85/barrel, which will support high prices and demand for fuel, as well as biofuels and oilseeds.