Iran Seizes Ship in Strait of Hormuz, Oil Prices Hold Above US$100

Illustration of a tanker. (Wikimedia Commons - Mostafameraji)

JAKARTA - World oil prices remain above US$100 per barrel after Iran seized two container ships in the Strait of Hormuz, Wednesday. At the same time, Iran-United States peace talks have not moved. This situation has again sparked concerns about world energy supplies, even though the stock market is still going strong.

Citing The Independent, Thursday, April 23 which launched Reuters, Thursday, Brent oil prices fell slightly 15 cents to US$101.76 per barrel. However, the level remains high after the previous day Brent closed above US$100 for the first time in more than two weeks. The United States benchmark oil, West Texas Intermediate, also fell 14 cents to US$92.82 per barrel.

The surge in prices in previous trading was triggered by two things. Stocks and industrial fuels such as solar and avtur fell deeper than expected. At the same time, negotiations related to the Iran-US conflict have not shown progress.

Another problem comes from the Strait of Hormuz. This waterway is not a normal waterway. Before the war broke out in late February, about a fifth of the world's daily oil supplies and global liquefied natural gas passed through there. Therefore, any disruption at this point quickly disrupts the energy market.

Donald Trump on Tuesday extended a ceasefire after a request from Pakistani mediators. However, the US Navy maintained a blockade on Iranian ports. The head of the Iranian parliament and chief negotiator, Mohammad Baqer Qalibaf, stressed that a new full ceasefire would make sense if the blockade was lifted.

Reuters also reported that the US military had intercepted at least three Iranian-flagged tankers in Asian waters. The ships were diverted from positions near India, Malaysia, and Sri Lanka.

Amid the growing energy risk, global stock markets are moving in the opposite direction. The S&P 500 index rose 1 percent, while the Nasdaq jumped 1.6 percent and closed at a record high. The rise was driven by the start of the season of fairly strong corporate earnings reports.

On Thursday morning, Japan's Nikkei index broke through 60,000 points for the first time. South Korean and Taiwanese exchanges also set records for the second consecutive day. The MSCI Asia-Pacific index outside Japan rose 1 percent to a record high. Meanwhile, Chinese blue-chip stocks rose 0.3 percent, while Hong Kong's Hang Seng fell 0.3 percent.

A number of analysts have warned that markets cannot continue to ignore geopolitical risks. Nuveen's global investment strategist, Laura Cooper, said the list of risks continued to grow while the way out was not yet visible. Head of Market Research at National Australia Bank, Skye Masters, also assessed that the financial market had not necessarily calculated correctly the fact that supply disruptions could last quite a while.

That's why news from Hormuz always quickly disrupts prices. The channel is narrow, but the influence is wide. When the ship is seized, the blockade has not been opened, and the supply is threatened to be dragged, the oil market reacts immediately.