Global oil reacts to Iran’s closure of Strait of Hormuz as brent remains over $100 per barrel

ICE Brent is set to settle above $100 per barrel for the first time since August 2022, undeterred by the US’ easing of sanctions on Russia and the IEA’s mulled release of strategic petroleum stocks.

The closure of the Strait of Hormuz sits front and centre to any oil price outlook, with Iran already striking at least 18 vessels since the US-Iran conflict started two weeks ago, OilPrice.com reports.

Iran’s new Supreme Leader, Mojtaba Khamenei, the son of the previous ayatollah, has pledged to continue blocking the Strait of Hormuz, calling it a lever that must be used after unmanned Iranian drones struck two tankers anchored in Iraqi waters.

The European Union stated that it does not see any ‘immediate concern’ regarding the security of its oil supplies, even though its leading members, Germany, France, and Italy have all announced SPR release in line with the IEA’s guidance.

US Energy Secretary Chris Wright said Navy escorts of oil tankers through the Strait of Hormuz are not possible currently, at the same time dismissing Tehran’s claims that oil will soon be traded at $200 per barrel, saying the world is well supplied with oil right now.

The US government issued a 30-day waiver for all countries to buy Russian oil and petroleum products currently at sea, provided they loaded before March 12, the latest move by the Trump administration to tame rising crude oil prices amidst blocked Hormuz Strait flows.

The chief executive of global mining giant Glencore (LON:GLEN) Gary Nagle said a recent surge in coal prices could bring back Australian peer Rio Tinto (NYSE:RIO) to the negotiation table, aiming to create the world’s largest mining firm worth $240 billion.

Brazil’s government has scrapped federal taxes on diesel, seeking to mitigate the impending rally of the middle distillate, all the while imposing a 12% export tax on crude oil outflows, notably higher than the 9.2% export tax implemented in early 2023.

Seeking to tame soaring transportation fuels prices and ease product movements between US states, the Trump administration is considering waiving the century-old Jones Act, banning foreign ships from carrying out intra-US deliveries, for a period of 30 days.

Norway’s maritime authority has forbidden Norwegian-flagged ships, currently totalling almost 1,500 vessels or 1% of the global tonnage, to enter the Strait of Hormuz until further notice, fearing reputational damage from its tankers being targeted by drones.

A number of global exchanges, including CME Group and Toronto Stock Exchange parent TMX Group, have voiced their opposition to the idea of the US Treasury intervening in oil futures markets amid rising energy prices on the back of the Iran conflict.

The USW trade union representing workers at BP’s (NYSE:BP) 450,000 b/d Whiting refinery in Indiana have overwhelmingly (98%) rejected the UK major’s ‘last, best, and final’ collective contract proposal, setting the stage for high-level industrial action.

Colombia has joined the International Energy Agency, becoming its 33rd member country this week, however as a net oil exporter with production levels above 750,000 b/d the Latin American country would not be subject to the IEA’s strategic petroleum storage requirements.

Kazakhstan’s largest oilfield, the 950,000 b/d Tengiz project, has suffered another fire incident, less than two months after a power plant blaze debilitated production for several weeks, however operator TCO indicated current output of 875,000 b/d will not be impacted.

Australia has become one of the first movers amongst IEA countries to tap into its strategic product stocks, pledging to release 5 million barrels of gasoline and diesel into the domestic market as China’s product export ban jeopardizes the country’s supply.

Iraqi oil producers slashed oil output by 3 million b/d as the closure of the Strait of Hormuz led to a tank-top situation across the country’s upstream and storage sites, with Baghdad hoping to move 200,000 b/d of crude in trucks to neighbouring Turkey and Jordan.

About The Author

Dele Fashomi

Dele Fashomi, seasoned journalist and communication teacher, is a holder of Master of Arts degree in Communication and Language Arts from the University of Ibadan in 1992/93.

Earlier, he had bagged a Bachelor degree from the same university in 1984, after which he proceeded to the Nigerian Institute of Journalism, Lagos, in 1990, for a postgraduate diploma in Journalism.

He had done many courses in communication, including the EU-BBC Editing Course in 2002.

Mr. Fashomi combines effectively the practice, research and teaching of communication. And to date, he has published two academic works in communication: Issues in Communication Technology and Policy (2010) and Economic and Social Issues in Advertising and PR (2013).

He had his first break in the Nigerian media in Concord Newspapers in 1990 and today, he has over two and half decades experience earned in several newspapers.

He has been part of many start-ups, such as The Republic (1987), The Comet (1999), The Anchor 2001 – 2002; Sun Newspapers (2003); Westerner newsmagazine (2005 – 2010) as Editor; National Life (2011) as Sunday Editor, and Newswatch Newspapers (2012- 2016) as Daily Editor.

Dele Fashomi is now the Publisher/Editor-in-Chief of Newstide247.com newspaper online, which he started in July 2015. He is also into biography writing, with many books in his trail, some of which he wrote alone and one he co- authored with his mentor, Mr Dare Babarinsa, entitled:  Olabiyi Durojaiye – DARE TO BE DiFFERENT. He also guided and collaborated with Pa Olatunji Odusanya in writing his autobiography – AGAINST ALL ODDS. There are many other books in the works under his pen.

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