Oil Prices Surge On Potential Prolonged Blockade At Strait Of Hormuz
By Siti Radziah Hamzah
KUALA LUMPUR, April 30 (Bernama) -- Oil prices surged above US$120 per barrel on Thursday as US President Donald Trump warned Iran that US naval blockade at the Strait of Hormuz could last months.
At the time of writing, Brent crude surged 5.93 per cent to US$125 per barrel while West Texas Intermediate advanced 2.31 per cent to US$109.30 per barrel amid stalled diplomatic efforts to restore access through the Strait of Hormuz and a continued US military buildup in the region.
SPI Asset Management managing partner Stephen Innes said the oil market was now trading on shrinking reserve buffers.
“Inventories are already low and spare capacity is limited due to the Strait of Hormuz block, so the real worry is that any aggressive escalation involving Iran quickly feeds into higher risk pricing.
“That is why Brent can move sharply from here. If tensions persist, a spike toward US$130 to US$150 is likely as the market prices worst case supply disruption, not just current flows,” he told Bernama.
Innes said that at those levels, demand destruction would start to emerge, which eventually caps the rally.
“So the story shifts from a supply squeeze to a broader economic impact the higher prices go. In short, this is now a fragility driven market knowing that reserves are drying up quickly,” he added.
-- BERNAMA