1125 ET – The global oil market will continue to see disruption and price volatility even if transit through the Strait of Hormuz is partially resumed, Neil Crosby of Sparta Commodities says in a note. Upward pressure on crude has eased following U.S. offers of financial and naval support for shipping in the Persian Gulf. But “the idea that things return to normal once ships start moving again is misleading,” Crosby says. The market isn’t just pricing the closure of Hormuz, but also damage to infrastructure and logistics across the Gulf region. “Prices, freight rates and refining margins could remain under pressure for weeks, even if traffic through the Strait begins to recover.” (anthony.harrup@wsj.com)
Oil Futures Pull Back in Early U.S. Trade
0935 ET – Oil futures are slightly lower as President Trump’s offer of financial and naval support to protect shipping in the Persian Gulf eases concerns about the length of time that traffic through the Strait of Hormuz will be halted. “Trump’s plan to ensure tankers and offer escorts would appear to be a reasonable idea but bureaucratic, financial and legal issues could slow the development of such a process,” Ritterbusch and Associates says in a note. Still, the market will need to see evidence of reduced military activities “or some attrition of Iranian attacks,” the firm adds. “The longer the war extends, the more gradual an eventual price decline.” WTI is down 0.4% at $74.25 a barrel and Brent slips 0.2% to $81.22. (anthony.harrup@wsj.com)
Oil Futures Lose Some Upward Momentum
0745 ET – Oil futures are steadying as the rise driven by the Iran conflict loses impetus. “The parabolic rise in Brent and WTI leaves prices vulnerable to a near-term pullback, with the market appearing overbought in the short term,” says Russell Shor of Tradu. With tanker traffic through the Strait of Hormuz at a virtual standstill, moving that oil to market has become the key challenge, he adds. President Trump’s offer of naval support to protect tankers through the strait “could act as a catalyst for a partial normalization in oil prices following their rapid ascent.” WTI is off 0.1% at $74.49 a barrel and Brent is 0.5% higher at $81.82. (anthony.harrup@wsj.com)
Oil-Price Shock Could Push BOE Rates Above 4%
1112 GMT – The Bank of England could be forced to raise its key interest rate back above 4% should the surge in energy prices prompted by military action in the Middle East persist, the National Institute of Economic and Social Research says. A year with oil prices at $100 a barrel and gas prices rising a further 50% would push U.K. inflation up by 0.7 percentage points and dampen output growth by 0.2% in 2026, NIESR analysis shows. That would prompt a tighter monetary policy response, with interest rates increasing by approximately 0.8 percentage points this year compared to the baseline, it says. The BOE benchmark rate is currently 3.75%. A more transitory shock to energy prices would raise inflation by around 0.3ppts, allowing the BOE to look through the impact, the analysis says. (edward.frankl@wsj.com)
Oil Rises Despite U.S. Escort Plan Through Hormuz
0733 GMT – Oil prices extend gains as the Middle East conflict enters its fifth day, with President Trump saying the U.S. will provide insurance guarantees and naval escorts for tankers transiting the Strait of Hormuz. “This is welcome news, but clearly it won’t happen overnight,” analysts at ING say. “Naval escorts will be sitting ducks to Iranian attacks.” In early trading, Brent crude gains 3.1% to $83.92 a barrel, while WTI is up 2.4% to $73.62 a barrel, driven by growing concerns over oil flows through the strait and attacks against key energy infrastructure curbing production. (giulia.petroni@wsj.com)
China’s Oil Reserves Cushion Impact of Middle East Supply Disruptions
0847 GMT – China is relatively well positioned to manage supply disruptions from the Middle East thanks to its substantial stockpiling efforts, according to analysts at ANZ. The closure of the Strait of Hormuz by Iran has sent shockwaves through global energy markets, with Asia expected to bear the brunt, as the majority of oil transiting the strait is destined for the region. However, China has been steadily building its crude reserves. “With its current reserves estimated at 1.8 billion barrels, China may reduce imports if prices rise further,” Daniel Hynes and Soni Kumari say. (giulia.petroni@wsj.com)
Brent Could Mark $100 if Hormuz Disruptions Persist
0722 GMT — Lingering geopolitical uncertainty is likely to keep a risk premium in oil prices, Goldman Sachs says, raising its 2Q average oil price forecasts. It lifts its Brent outlook to $76 a barrel from $66 and WTI to $71 from $62. A prolonged disruption in the Strait of Hormuz lasting five additional weeks could push Brent prices to $100, the analysts say, noting it’s “a level associated with larger demand destruction to prevent inventories from falling to critically low levels.” A brief collapse in exports followed by a gradual recovery could drain OECD inventories and result in roughly 200 million barrels of Middle Eastern production losses. Front-month WTI crude oil futures rise 2.8% to $76.64/bbl; front-month Brent crude oil futures gain 3.0% to $83.86/bbl. (jihye.lee@wsj.com)
Oil Likely to Trade at $80/Bbl in Short Term
0545 GMT — Oil is likely to trade at $80 a barrel in the short term as Iran’s capacity to consistently disrupt oil flows in the Middle East is limited under Natixis’s baseline scenario, its research team says in commentary. So far, U.S.-Israel and Iran operations are mostly against military and air transportation facilities, though earlier this week Iran targeted a refinery in Saudi Arabia and Qatar’s LNG facilities, the team notes. “For now, no meaningful oil outage has occurred, with only short-term disruption to transit via the Strait of Hormuz,” the team adds. Front-month WTI crude oil futures are 1.3% higher at $75.54/bbl; front-month Brent crude oil futures are 1.6% higher at $82.72/bbl. (ronnie.harui@wsj.com)
Oil Prices May Remain Elevated Relative to Preconflict Levels
0350 GMT — Oil prices are likely to remain elevated relative to preconflict levels, with a risk of spikes if there are concerns about a prolonged disruption of the Strait of Hormuz, PineBridge Investments analysts say in a note. Risk assets can handle a “low intensity” war of attrition in the Gulf if the risk of a prolonged impassibility of the Strait is diminished, they say. Oil prices will likely be the reason the Iran conflict results in changes to fed-funds rate expectations, they add. Still, the analysts say there are additional hurdles to clear before they shift their expectations away from three rate cuts. The oil-price increase would have to be enduring and filter substantially through to the rest of the real economy, they add. (jiahui.huang@wsj.com; @ivy_jiahuihuang)
