The situation worsens in the Strait of Hormuz: oil jumps 6% after the United States took…

After the seizure of an Iranian cargo ship by the American navy, oil prices surged by over 6% on Monday morning. Approaching $89, the WTI erased its decline from last week as Iran threatens to retaliate and once again closes the Strait of Hormuz. This increased volatility is prompting Asian markets to proceed with caution and fueling concerns of inflationary tensions.

Oil prices are soaring once again on Monday, April 20. By 6 a.m. this Monday morning, the price of a barrel of West Texas Intermediate (WTI), the American market benchmark, jumped by over 6% to nearly $89, while the North Sea Brent, the global benchmark, increased by over 5.5% to $95.37. Despite this, Asian markets were making gains cautiously.

Context: Oil prices rose due to tensions involving the seizure of an Iranian cargo ship and the closure of the Strait of Hormuz by Iran amid threats of retaliation. This situation has led to concerns about inflationary pressures in the market.

Fact Check: The article discusses the impact of the seizure of an Iranian ship by the U.S. military in the Gulf of Oman, leading to heightened tensions in the region.

Talks on Hold

After hopes for easing tensions in the Middle East and the prospect of renewed talks between Washington and Tehran caused oil prices to drop last week, the situation took a drastic turn over the weekend.

Iran vowed on Monday to “respond soon” to the American navy’s takeover of one of its cargos. President Donald Trump had earlier announced that the U.S. navy had fired on and seized the Iranian cargo ship Touska in the Gulf of Oman.

Additionally, Tehran currently does not plan to “participate in the upcoming Iran/U.S. talks session,” according to Iranian state television on Sunday.

In response to the U.S. blockade of its ports, Iran stated on Saturday that it would revert to “strict control,” retracting its decision from the previous day to reopen the waterway through which one-fifth of the world’s oil and gas trade typically passes.

Iranian Ship Seized

“The information with the greatest impact on the markets is undoubtedly the seizure of an Iranian ship by the U.S. military in the Gulf of Oman, as Iran has also announced that it will retaliate,” noted Chris Weston, an analyst at broker Pepperstone.

“The tone is risk-averse at the start of the week… The normalization of transit through the Strait of Hormuz had been seen as a major diplomatic victory. However, in the absence of a comprehensive agreement on Iran’s nuclear program, the ceasefire remained fragile,” he emphasized.

“With transit flows through the Strait of Hormuz now completely halted again, operators are now reassessing the probabilities and timeline for logistical normalization, adjusting their positions after the more constructive assumptions of last week,” Mr. Weston added.

Asian Markets Remain Cautious

At the Tokyo Stock Exchange around 6 a.m. in France, the Nikkei benchmark index rose by almost 1% to 59,058 points, while the broader Topix index increased by 0.68% to 3,786 points. In Seoul, the Kospi index rose by 1.14%.

Despite the fluctuations related to the situation in Iran, Asian markets seem to be buttressing their gains from the previous week. However, the rise in crude oil prices could limit this progress. Faced with the possibility of high volatility, operators may opt for the shares of companies that have recently reported strong quarterly results, according to analysts from Tokai Tokyo Intelligence.

Gold Drops, Dollar Holds Steady

Gold fell by 1.38% at 6 a.m., to $4.8 per ounce. The prolonged conflict in the Middle East and the recent escalation are heightening the prospects of lasting inflationary tensions, making it more likely for central banks to maintain or even increase interest rates. This is unfavorable for gold, a safe-haven asset that does not offer any yield.

On the other hand, the American currency rose by 0.19% against the Japanese yen, reaching 158.96 yen for one dollar.