Brent gains after Iran seizes two vessels in the Strait of Hormuz

The front-month ICE Brent contract has gained by $4.58/bbl on the day, to trade at $104.00/bbl at 09.00 GMT.

IMAGE: Oil pumpjacks. Getty Images

Upward pressure:

Brent crude’s price has surpassed $100/bbl as traffic through the Strait of Hormuz remains shut.

According to a Bloomberg report, only one bulk carrier attempted to exit the strait in the past 24 hours.

Iran’s Revolutionary Guards (IRGC) seized two container vessels yesterday, Reuters reported citing Iran’s semi-official Tasnim News Agency.

The move comes despite the ongoing ceasefire between Washington and Tehran and in response to the US Navy’s seizure of two Iran-linked vessels earlier this week and blockade of the Strait of Hormuz.

“Iran’s seizure of two vessels attempting to transit the Strait of Hormuz suggests disruptions to shipments are set to continue,” two analysts from ING Bank noted.

Meanwhile, Israel’s military has continued attacking southern Lebanon, Reuters reported. The attacks come amid a separate ceasefire deal agreed between Beirut and Tel Aviv.

“The oil market is repricing expectations with little sign of progress in finding a resolution in the Persian Gulf,” ING Bank analysts said.

Downward pressure:

Brent’s price has felt some downward pressure after the US Energy Information Administration (EIA) reported a build in US crude oil stocks.

Commercial US crude oil inventories increased by 1.9 million bbls to about 466 million bbls in the week ending 17 April, according to data from the EIA.

A build in US crude stocks typically indicates lower demand for oil and can put some downward pressure on Brent's price.

“Energy Information Administration data continue to show that the US is exporting record amounts of oil,” ING Bank’s analysts said.

By Aparupa Mazumder

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