Crude oil 'to hit $130' as Strait of Hormuz closed and US seizes Iran ship
Investors have been warned that the stock market could tumble as well.
The price of crude oil could hit a dramatic $133.91 in the next few days, according to forecast by broker LiteFinance.
It comes as the fragile ceasefire between the US and Iran is on the verge of collapse following a direct naval confrontation in the Gulf of Oman.
President Donald Trump announced on Sunday that the US Navy successfully intercepted and seized the Iranian-flagged cargo ship Touska after it allegedly attempted to breach an American naval blockade.
While the US is dispatching a delegation led by Vice President JD Vance to Islamabad, Pakistan, for a second round of peace negotiations, Iranian state media has rejected the invitation.
Tehran has condemned the seizure of its vessel as an "armed robbery" and a violation of the existing truce, vowing to keep the Strait of Hormuz closed until the U.S. lifts its maritime siege.
The ceasefire is due to expire this Wednesday - and Tehran and Washington still seem miles away from a peace deal.
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US allows purchase of Russian oil as prices skyrocket
The US has already implemented measures to help stem the surge in oil prices.
The Trump administration on Friday renewed a waiver allowing countries to buy sanctioned Russian oil at sea for about a month as oil prices skyrocket.
Lawmakers accused the government of being too soft on Moscow as the war on Ukraine continues.
Ukraine’s President Volodymyr Zelensky said "every dollar paid for Russian oil is money for the war".
The Treasury Department's waiver will allow countries to purchase Russian oil and petroleum products until May 16, which replaces a 30-day waiver that expired on April 11.
Key differences between Brent and WTI oil
Brent Crude and West Texas Intermediate (WTI) are the two primary global oil benchmarks.
WTI (West Texas Intermediate) oil is a blend of several oils drilled and processed in the United States. It is primarily used as a benchmark for the US oil market.
Brent crude oil is used as a benchmark for the European, Middle Eastern and African markets. The blended oil is drilled from below the North Sea, and is widely used for diesel and gasoline.
Current price update
Brent crude prices are currently sitting at $95.06 (£70.48) a barrel, up 4.68%.
West Texas Intermediate is 4.85% higher, at $88.70 (£65.78).
How many vessels have crossed the Strait this weekend?
Nineteen vessels crossed the strait on Saturday, up from 10 the previous day.
However, this falls far below the historical daily average of 138 transits, according to the United Kingdom Maritime Trade Operation (UKMTO).
Expert warns - expect more of the same
"Oil markets continue to gyrate in response to oscillating social media posts by the US and Iran, rather than the realities on the ground which remain challenging for oil flows to resume in a rapid fashion", analyst Saul Kavonic from financial services firm MST Marquee told the BBC.
Oil up, but not as high as expected
Brent crude futures were up by 4.74% at $94.66 (£70.11) a barrel as of 5:30am, which was a drop from the 7% high seen earlier in the night.
Slight ease on pricing
Brent is trading at $95.14 at around 4:30am UK time, 5.27% up on the previous day
Questions over insider trading
On Friday, just 20 minutes before the Iranian foreign minister, Seyed Abbas Araghchi, declared the Strait of Hormuz was “completely open”, investors “placed a bet worth about $760 million on a falling oil price”, Reuters reports.
Anticipation ahead of market open
Wall Street is coming off a winning week, with the S&P 500 and Nasdaq Composite climbing to all-time highs following a ceasefire between Iran and Lebanon.
Iran slams US 'piracy'
Iran condemns the US seizure of an Iranian-flagged cargo ship in the Strait of Hormuz as an act of “armed piracy” and vows to retaliate.
Asia markets open mixed
West Texas Intermediate futures surged 8.11% to $90.65 per barrel as of 8:03 p.m. Brent crude rose 7.21% higher to $96.90 per barrel.
South Korea’s Kospi was higher at 0.27% while the small-cap Kosdaq dropped 0.52%. Japan’s Nikkei 225 rose 0.62%, while the Topix gained 0.68%. Australia’s S&P/ASX 200 was 0.39% lower.
Hong Kong Hang Seng index futures were at 26,502, higher than the index’s last close of 26,160.33.
Iran attacked tanker
The U.S. seizure of the ship came after Iran attacked a tanker in the Strait of Hormuz on Saturday. Revolutionary Guard gunboats fired on the tanker and a container ship was hit by an unknown projectile, according to the United Kingdom Maritime Operations Centre.
Cargo ship hit
The US Navy on Sunday fired on an Iranian container ship in the Gulf of Oman and the Marines later took custody of the vessel.
Oil jumps up, stocks down in futures
The price of oil jumped sharply, and stock futures tumbled Sunday evening.
US crude oil jumped more than 7%, to about $90 per barrel, and international Brent crude oil rose 5%, to around $95 per barrel.
S&P 500 futures dropped nearly 0.8%, Nasdaq 100 futures fell 0.7%, and Dow futures tumbled 500 points, or 0.7%. Russell 2000 futures slid 1.4%.
Crude forecast to hit $133.91
Analysis by LiteFinance shows that crude could hit a high of $133.91 this month, and a low of 82.72.
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