Oil prices jumped around 5% in early Monday trading on fears that the ceasefire between the United States and Iran could collapse after the U.S. seized an Iranian cargo ship and traffic through the Strait of Hormuz remained largely halted. Both contracts tumbled by 9% on Friday, their largest daily declines since April 18, after Iran stated that passage for all commercial vessels through the Strait of Hormuz was open for the remainder of the ceasefire.
U.S. President Donald Trump said that Iran had agreed never again to close the strait, which is crucial for about a fifth of the world’s oil supply. Sparta Commodities analyst June Goh noted that market fundamentals are worsening, with 10-11 million barrels per day of crude oil shut in. The United States seized an Iranian cargo ship attempting to breach its blockade, while Iran threatened retaliation, raising fears of renewed hostilities. Shipping traffic through the Strait of Hormuz remained at a virtual standstill on Monday, with only three crossings in the past 12 hours.
