-flagged vessels to avoid Iranian territory while traveling through the Strait of Hormuz and Gulf of Oman. The move heightened concerns about potential oil supply disruptions due to escalating tensions between the US and Iran. About a fifth of global oil consumption passes through this critical shipping lane, making it a key factor in determining oil prices.
The advisory was issued following recent incidents where Iranian forces have boarded vessels in the region. S. 38.
-flagged ships to stay close to Oman while eastbound in the Strait of Hormuz. This move was seen as a cautious measure to mitigate the risk of being boarded by Iranian forces, which has historically been a concern for vessels traveling through this region. The advisory renewed concerns that tensions between the US and Iran could lead to oil supply disruptions.
Oil prices had dropped earlier in the session, extending last week's losses, after the US and Iran pledged to continue indirect talks following what both sides described as positive discussions. However, on Saturday, Iran's foreign minister stated that the country will strike US bases in the Middle East if attacked by US forces, which has raised concerns about the potential for further escalation. Investors are also monitoring Western efforts to curb Russia's income from oil exports that support its war in Ukraine.
The European Commission has proposed a sweeping ban on any services that support Russia's seaborne crude oil exports. Refiners in India, once the biggest buyer of Russia's seaborne crude, are avoiding purchases for delivery in April, sources said. This move could have a positive impact on oil prices if it is sustained.
Meanwhile, in Kazakhstan, the Chevron-led Tengiz oil field has recovered to around 60% of peak production and aims to reach full output by February 23, according to sources. The recovery of this major oil field is a positive development for the global energy market.
The recent surge in oil prices can be attributed to the increased uncertainty surrounding US-Iran tensions, which has led to a cautious approach from the US government. As long as these tensions persist, oil prices are likely to remain volatile.
