Just a day since the announcement of ceasefire and oil markets are already seeing heavy price swings. Crude prices rose 2% as Israel launched a heavy wave of strikes against Lebanon putting the US-Iran peace plan under pressure.
Global benchmark for oil, Brent crude futures for June rose by more than 2% quoted near the $97/bbl mark, while US crude futures, West Texas Intermediate was also up over 2% trading near the $97/bbl level.
The rise came just a day after crude prices slipped by over 13% marking one of its biggest one day falls since 2020.
Strait of Hormuz blocked again
Iran’s Islamic Revolutionary Guard Corps asserted that shipping through the crucial trade route- Strait of Hormuz stopped after what it said was an Israeli ceasefire violation in Lebanon. The White House had previously established that the ceasefire would continue if the strait remains open.
“Due to Israeli strikes in #Lebanon, oil tankers will not be permitted to pass through the Strait of #Hormuz,” the Iranian embassy in Mumbai said in a social media post on X on Wednesday, citing Iran’s Fars News Agency.
This put a strain on oil prices as the Hormuz route transits around 20% of the world’s global energy flow, with India being one of the most significant importers of Middle Eastern crude.
Analyst say crude presents buying opportunity
Developments surrounding the US-Iran ceasefire remain uncertain as Iranian leaders have said that three points of its truce proposal have been breached.
With all these geopolitical developments unfolding, analysts believe that crude presents a more “opportunistic buying”.
“Now that oil is below $100 per barrel, refiners should “use this window to resume more opportunistic buying,” CNBC quoted Janiv Shah, Rystad Energy’s vice president of commodity markets.
Alternate route for crude
In another social media post on X, the Iranian Consulate in Mumbai advised ships to use alternate routes for their safe transit. With directions from the Iranian Navy the consulate said that vessels should use other routes until further notice.
“Iranian Navy: Due to the past war situation & possible anti-ship mines in the main traffic zone of the Strait of Hormuz (per attached map), all vessels are advised to coordinate with the #IRGC Navy and use alternative routes until further notice,” the post read.
Conclusion
Given the sharp swings and price volatility most analysts are focusing on key levels to execute trade.
Disclaimer: This article is for informational purposes only and not investment advice. This does not reflect the views of the website. Readers are advised to consult a financial advisor before making any investment decisions.