Oil prices rebounded more than 6 per cent on Monday after tumbling more than 9 per cent on Friday on news the Strait of Hormuz is closed again after both the US and Iran said the other party had violated their ceasefire deal by attacking ships over the weekend.
Brent crude futures jumped $6.11, or 6.76 per cent, to $96.49 a barrel by 2327 GMT and US West Texas Intermediate was at $90.38 a barrel, up $6.53, or 7.79 per cent.
The US military had seized an Iranian cargo ship that tried to run its blockade, US President Donald Trump said on Sunday, while Iran said it would not participate in a second round of peace talks despite Trump’s threat of renewed airstrikes.
The United States has maintained a blockade of Iranian ports, while Iran has lifted and then reimposed its own blockade of the Strait, which handled roughly one-fifth of the world’s oil supply before the war began almost two months ago.
“Oil markets continue to gyrate in response to oscillating social media posts by the US and Iran, rather than the realities on the ground which remain challenging for oil flows to resume in a rapid fashion,” Saul Kavonic, MST Marquee’s head of research, said.
Both contracts posted on Friday their largest daily declines since April 18 after Iran said passage for all commercial vessels through the Strait of Hormuz was open for the remaining ceasefire period and Trump said Iran had agreed to never close the strait again.
“The announcement of the Strait opening proved premature,” Kavonic said.
“Ship owners will be twice shy about heading towards the Strait again without receiving much more confidence that any announced passage is real.”
More than 20 ships passed the strait on Saturday carrying oil, liquefied petroleum gas, metals and fertilizers, Kpler data showed, the highest number of vessels crossing the waterway since March 1.