Gotrade News - Brent crude briefly broke above USD126.41 per barrel on Thursday, the highest level in four years. The benchmark contract then fell USD4.02 or 3.41%, closing at USD114.01.
The volatility played out as the US naval blockade on Iranian ports continued. The Strait of Hormuz, a chokepoint for 20% of global oil and LNG flows, saw only 7 vessels cross in 24 hours versus the normal 125 to 140 daily transits.
Key Takeaways
- Brent crude logged a four-year peak at USD126.41 before month-end profit-taking forced a 3.41% retreat in the spot contract.
- Strait of Hormuz tanker traffic collapsed to 7 vessels per day, illustrating the blockade's drag on global energy logistics.
- A weaker US dollar driven by the yen surge made dollar-denominated commodities less attractive, adding to the pullback.
WTI tracked higher before slipping USD1.81 or 1.69% to USD105.07 after touching USD110.93 intraday. The July Brent contract held up better, settling 0.4% higher at USD110.88 per barrel.
Donald Trump weighed in firmly on the blockade. "Their economy is being destroyed, this blockade is remarkable, their economy is in bad shape", he said per Bloomberg Technoz.
There is no sign of a diplomatic breakthrough between Washington and Tehran. Iran's new leadership has issued strong rebuttals to US actions, leaving peace talks in limbo.
Month-end profit-taking and the expiration of June Brent contracts emerged as the dominant technical drivers of the slide. Hedge fund longs were also being trimmed after eight consecutive higher sessions.
Dollar weakness compounded the slide for dollar-priced crude. The yen's 3% surge on the day made dollar-denominated commodities less appealing to global buyers per Kabar Bursa.
One analyst described current conditions as turbulence rather than a response to fresh news. Another said the landscape is too fluid to anchor on a solid fundamental footing.
The oil market is now in wait-and-see mode with both directions capable of sharp moves. Strait of Hormuz throughput and the trajectory of US-Iran negotiations will dictate near-term pricing.
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