Oil extends gains as Strait of Hormuz impasse rattles markets
Prices climbed on Tuesday as traders priced in a prolonged stand-off between Washington and Tehran over the Strait of Hormuz, the narrow shipping lane
Oil prices climbed on Tuesday as traders priced in a prolonged stand-off between Washington and Tehran over the Strait of Hormuz, the narrow shipping lane that carries a huge share of the world’s crude. Stocks slipped as the prospect of a deal looked dimmer.
Brent and U.S. crude had already surged 5% on Monday, and the move carried into Tuesday’s trade. By then, oil had touched a one-week high, with investors reacting to a sharper risk that the Middle East crisis will drag on and keep the waterway shut.
Hormuz stays shut under Iran’s terms
Iran’s newly appointed secretary of the Supreme National Security Council said on Tuesday the Strait of Hormuz would remain closed unless the United States changed its behavior and accepted Tehran’s conditions to end the war. The message undercut hopes for a quick thaw.
That stance fed a familiar market fear: if Hormuz stays blocked, the shock would reach far beyond the Gulf. The route is a critical artery for global energy supplies, so any prolonged disruption tends to ripple through shipping, fuel costs and inflation expectations.
Markets turn cautious
Wall Street finished lower, while world equities gave back earlier gains and MSCI’s gauge of stocks across the globe fell 0.23%. Asia shares also drifted. Traders were trying to balance the chance of some sort of detente against the risk that the dispute worsens before it eases.
“Markets are grappling with the prospects of some form of detente, although they're misguided in thinking that any form of resolution is the last chapter of this story,” said Ron Albahary, chief investment officer at LNW.
Uncertainty over the inflation outlook also weighed on sentiment. Gold eased from a two-month peak ahead of consumer price data due on Wednesday.
The latest price move shows how quickly energy markets can swing when Hormuz is in play. For now, traders are still waiting for one thing: a sign that either side is ready to blink.
