US Attack Near Hormuz Makes Oil Prices Rise Again

JAKARTA - World oil prices have risen again after the latest US military attack on Iran made the prospect of reopening the Strait of Hormuz unclear.

Quoted from The Straits Times which launched Bloomberg, Tuesday, May 26, Brent crude prices rose above 98 US dollars per barrel. The day before, May 25, Brent had fallen more than 7 percent. Meanwhile, West Texas Intermediate or WTI, the benchmark for US oil prices, was around 92 US dollars per barrel.

The price increase came after the US Central Command said its forces attacked a missile launch site and a ship that was said to be laying mines. Iranian media had previously reported explosions around the Strait of Hormuz.

The Strait of Hormuz is a narrow waterway that is crucial to the world's energy supply. In peacetime, about a fifth of global supplies of oil and liquefied natural gas pass through the region.

US Secretary of State Marco Rubio said Washington and Tehran's negotiations still needed a few days. Both parties are still discussing the wording in the initial agreement document.

Previously, oil prices had fallen sharply after US President Donald Trump wrote that negotiations were going well. However, Trump also threatened additional attacks if negotiations failed.

The US and Iran are discussing an agreement to extend the ceasefire for about two months. In the draft, the US will lift the blockade, while Iran reopens the Strait of Hormuz.

However, the road to an agreement is still stalled. Iran wants to continue to regulate ship traffic in the Strait of Hormuz. This attitude is rejected by the US, Arab countries, and Europe.

MST Marquee senior energy analyst Saul Kavonic said it was too early to assume a peace deal would be reached, let alone adhered to.

"In recent months there have been claims from both sides about the success of negotiations or the opening of the strait, but it has not materialized," said Kavonic.

Beyond Hormuz, Iran's nuclear program remains a stumbling block. In a separate post, Trump said Iran's enriched uranium should be destroyed in Iran, although it could also be handed over to the US.

Washington cites Iran's nuclear program as the main reason for its involvement in the conflict with Israel. The US believes Tehran wants to develop nuclear weapons.

Tensions have also spread to Lebanon. Israel on May 25 said it would step up attacks on Iran-backed Hezbollah. Meanwhile, Tehran demanded a cessation of hostilities in Lebanon as part of any deal with the US.

As long as the Strait of Hormuz has not been opened and attacks are still occurring, oil prices have the potential to continue to move wildly following news of the war and negotiations.