Oil Holds Above $100 as Hormuz Tensions Persist; Trump Says Ceasefire Uncertain

Suehyeon Lee

Summary

International oil prices held above $100 a barrel as fears of prolonged tensions in the Middle East kept prices elevated.
Concern is growing that a de facto blockade of the Strait of Hormuz is disrupting global crude oil and natural gas supply, and that rising energy prices could add to inflationary pressure.
Differences between Iran and the US over lifting the maritime blockade, easing sanctions, and control of the Strait of Hormuz have dimmed prospects for a comprehensive agreement in the near term, raising the risk of renewed military conflict and a prolonged low-intensity standoff.

Forecast Trend Report by Period

International oil prices held above $100 a barrel as fears of prolonged tensions in the Middle East kept energy markets on edge.

Bloomberg reported on May 11 that Brent crude traded above $104 a barrel, extending the previous day's gains. West Texas Intermediate also remained strong at around $98 a barrel.

The latest advance followed comments from President Donald Trump casting doubt on the durability of a ceasefire with Iran. Trump recently rejected Iran's proposal to end the war and said the ceasefire was effectively in a precarious state.

The Strait of Hormuz remains in conditions close to a de facto blockade, disrupting global flows of crude oil and natural gas. The supply threat has fueled concern that higher energy prices could add to inflationary pressure.

Iran has demanded the lifting of the maritime blockade, sanctions relief and continued control over part of the Strait of Hormuz in response to a US proposal, Bloomberg reported. With the two sides still far apart, a comprehensive agreement does not appear close.

Bloomberg Economics said in a report that the two sides are likely to slip back into military confrontation. It added that the intensity of any clashes may gradually ease, leading to a prolonged low-level conflict.

Trump is also discussing possible additional military responses with his national security team and reviewing whether to resume escort operations for ships passing through the Strait of Hormuz, Bloomberg reported.