West Texas Intermediate cleared $80 to reach a four-week high on Tuesday after Washington reinstated its naval blockade of Iran. Fresh U.S.-Iran military exchanges have choked traffic through the Strait of Hormuz, raising fears over the security of energy flows.
West Texas Intermediate cleared the $80 mark on Tuesday, hitting a four-week high after Washington reinstated its naval blockade of Iran. Renewed military exchanges between the U.S. and Tehran have driven crude higher as traders reprice the risk to supply. WTI traded at 80.66, up 3.23%, while Brent traded at 86.85, up 4.27%.
Hormuz shipping collapses to a fraction of normal
The blockade has throttled the world's most important oil chokepoint. Before the war, as many as 140 ships per day passed through the Strait of Hormuz. The latest estimate puts that figure at 14, roughly 10% of normal flow.
Almost no crude or LNG is now moving through the strait because of the added safety and security risk, according to FXStreet. That squeeze feeds straight into the supply-and-demand balance and pushes prices up. FXStreet cautioned that traders may want some sign the lane is at least partly open before positioning for a reversal.
Equities pull back as the conflict spreads
The move rippled beyond crude. All major U.S. stock indices pulled back, FXStreet reported. Gold traded almost back to $4,000. FXStreet added that if the hostilities last for a few days, oil prices may rise again.
For now, the numbers tell the story: with Hormuz traffic down to a tenth of normal, barely any crude is reaching the market.
Sources: Seeking Alpha (snippet-based), FXStreet
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