Oil prices moved lower on Wednesday as investors weighed the prospect of a U.S.-Iran agreement that could restore shipping through the Strait of Hormuz, where traffic has remained severely disrupted since the conflict erupted in late February.
WTI crude oil futures were down 5.4% at 8.36 a.m. EST, while Brent futures were down 4.6% to $94.9 per barrel.
Piper Sandler Warns Supply Risks Remain Elevated
Meanwhile, Wall Street brokerage Piper Sandler doesn’t believe that a new deal will be decided soon between the U.S. and Iran, and expects oil prices to remain elevated as the Strait of Hormuz is largely expected to remain closed.
In a note, the brokerage said it sees little chance of traffic through the Strait of Hormuz returning to 50% of pre-war levels anytime soon.
Fresh US Strikes Test Fragile Iran Truce
Iran on Tuesday accused the U.S. of breaching a fragile ceasefire after American forces struck targets in Hormozgan province. Local media reported explosions in the southern region early Tuesday.
The U.S. said the operation was defensive and targeted missile sites and vessels allegedly attempting to lay naval mines. Tehran called the strikes a “gross violation” of the truce that has been in place since April.
The ongoing war erupted on February 28 after the U.S. and Israel struck Iranian nuclear and military targets, citing concerns over Tehran’s advancing nuclear program and missile capabilities following the collapse of diplomatic talks.
Iran responded with missile attacks across the region and moved to close the Strait of Hormuz, disrupting energy flows and driving a surge in global oil prices.
Shipping activity through the Strait of Hormuz, a key energy corridor that typically handles roughly 20% of global oil and LNG trade, has remained well below normal levels since the conflict erupted.
Image via Shutterstock
Recent Comments