Oil and Stocks Rise as Strait of Hormuz Remains Closed
Last week's nine-cent drop in U.S. fuel prices may be short-lived, analysts warn, as the standstill on the strategic waterway pushes global energy prices up.
Last week's nine-cent drop in U.S. fuel prices may be short-lived, analysts warn, as the standstill on the strategic waterway pushes global energy prices up.
Oil prices surged on Monday, erasing part of last week's decline, as hopes for an imminent reopening of the Strait of Hormuz faded. The rally was fueled by Iranian demands to the United States, including an end to military threats, lifting sanctions, and payment of compensation, as conditions for reopening this strategically vital waterway.
Brent crude futures rose by more than two dollars, posting a daily gain of 3.3 percent to $84.64 per barrel. U.S. West Texas Intermediate (WTI) also saw a strong increase of 3.1 percent, reaching $80.63.
Last week, both major benchmarks fell by seven percent, driven by hopes for a deal to unblock the strait. That brought temporary relief to American drivers. According to data from the American Automobile Association (AAA), which tracks daily fuel prices, the average price of a gallon (3.78 liters) of gasoline in the U.S. fell by nine cents, from $4.09 to $4.00.
However, analysts warn that this relief may be short-lived. "While the strait remains essentially closed, oil is currently trading at $80 to $85 per barrel, reflecting hope for a resolution in the near future," said analysts at SEB Research in a note to investors.
"With the strait still closed, pressure on fuel prices could quickly return, and if things don't go well, the national average could reach its highest level ever recorded this late in the calendar year," said Patrick De Haan, head of petroleum analysis at GasBuddy.
De Haan added a cautious recommendation: "For now, enjoy the drop, but keep a close eye on how the situation with the strait develops in the coming days."
The rise in oil prices was also reflected in the U.S. stock market at the start of the trading week. ExxonMobil shares rose 2.9 percent in midday trading. Chevron saw a gain of 3.1 percent, BP rose 2.1 percent, and Shell gained 1.2 percent. ConocoPhillips was up 2.7 percent since the market opened.
The global rise in energy prices, driven by the standstill in the Strait of Hormuz, has direct consequences for the world market, including the European Union, which is a significant oil importer, and could ultimately affect fuel prices at Croatian gas stations.
