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Once again there has been a major earthquake in the Global Energy Market. After the increasing military tension between America and Iran and a shocking statement by US President Donald Trump, a huge jump of 10% has been recorded in the prices of crude oil in the international market.
Brent crude prices have recovered from yesterday’s low level and are now very close to $85 per barrel, which is the highest level in the last four weeks. In the last trading session, Brent crude saw a rise of 9.6%, which is the biggest jump in a day since May 2020.
Donald Trump’s ‘20% fee’ statement and American blockade
The main reason for this sudden rise in crude oil prices is the statement of US President Donald Trump, which he has posted on his social media platform ‘Truth Social’. Trump has demanded that a 20% cargo fee should be imposed on oil ships passing through the Strait of Hormuz or a payment of more than $30 million ($30 million) should be taken from entire supertankers carrying oil.
Citing Gulf countries like Saudi Arabia, UAE, Qatar, Bahrain and Kuwait, Trump said that the countries who want the security of this strategic waterway will have to pay this to America. Along with this, the US Central Command (CENTCOM) has carried out air strikes on Iran for the third consecutive night and has restarted the naval blockade of Iranian ports.
Fragile ceasefire broken; Missile and drone attacks intensify in Hormuz Strait
Some time ago, an agreement (MoU) was signed between America and Iran to end the four-month long war, but this fragile ceasefire could not last long.
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Attack on UAE tankers: According to Iran’s semi-official news agency ‘Fars’, the Iranian Army has targeted American bases in Kuwait with drones. The United Arab Emirates (UAE) has officially confirmed that two of its large oil tankers in the southern shipping route of the Strait of Hormuz have been attacked with cruise missiles.
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Iran’s counterattack: Amidst the US blockade, Iran’s Foreign Minister Abbas Araghchi has made fun of Trump’s demand of 20% fee on the social media platform ‘X’. He has made it clear that Iran will remain the sole custodian of this strait and will not succumb to any external pressure.
Market experts’ opinion: How far will crude oil prices go?
According to Jay Hatfield, Chief Executive Officer (CEO) of Infrastructure Capital Management, as long as military activity in the Strait of Hormuz continues, crude oil prices will remain low. In the range of $80 to $85 Can remain. However, he believes that even under the current circumstances, there is little hope of prices going beyond $90 or $100. Experts also believe that if this strait is reopened completely safely through diplomatic negotiations, then crude prices can fall rapidly and come back to $60 per barrel.