Meanwhile, the UAE bids farewell to OAPEC: File Image/Pixabay
The on-again off-again U.S./Iran conflict that has seen oil prices spike and retreat for the past month was back on the boil Monday, with the U.S. reportedly closer to resuming “major combat operations” with the Islamic Republic – and causing crude to soar by nearly 6 percent.
Senior White House officials told chief national security correspondent Jennifer Griffin that “We are closer to the resumption of major combat operations than we were 24 hours ago after Iran fired on U.S. vessels and targeted United Arab Emirates today with missiles and drones and fast boats.”
More than a dozen Iranian missiles and drones were launched, causing three people to be injured, while a drone strike triggered a fire at an oil refinery wounding three Indian nationals.
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We don’t think Iran is going to have an epiphany
Jay Hatfield, CEO, Infrastructure Capital Advisors
West Texas Intermediate settled up 4.3 percent at $106.42 per barrel, while Brent settled up 5.8 percent at $114.44.
The latest driver of oil trading was U.S. president Donald Trump’s announcement on Sunday of “Project Freedom,” whereby starting Monday the military would help to “free” cargo ships of nations that aren’t involved in the Middle East conflict and that are stranded by the Strait of Hormuz closure.
As for Tehran’s updated peace proposal delivered to Washington last Friday, which kindled optimism that a settlement between both parties could be reached, Trump rejected the offer on the grounds Iran was only trying to make a deal because it had no military left and the U.S.’s blocking of Iranian ports was causing havoc with the country’s economy.
Jay Hatfield, founder and CEO at Infrastructure Capital Advisors, said, “We don’t think Iran is going to have an epiphany and get rid of their nuclear capabilities, and so that’s probably going to have to happen by force, and that’s not going to be well received by the market.”
But that’s questionable, considering a strong first-quarter earnings season have driven stocks higher to new records in recent days; and even if the war drags on, Hatfield sees the S&P 500 hitting 8,000 by the end of the year.
In other oil news on Monday, the UAE officially withdrew from the Organization of Arab Petroleum Exporting Countries (OAPEC), following its decision to exit the Organization of the Petroleum Exporting Countries (OPEC).
Abu Dhabi is reportedly removing itself from a regional framework it no longer sees as necessary while it increases output capacity and controls export policy on its own terms.
Ship & Bunker News Team
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