Crude oil prices surged on Friday after two container ships belonging to Chinese giant COSCO were blocked from passing through the Strait of Hormuz. The incident marked Iran's continued tight control over traffic in the critical sea route, even against ships belonging to its powerful allies.
Brent jumped to $111.06 a barrel while WTI rose to $97.01. The price increase reflected the market's failure to calm down despite diplomatic claims about progress in negotiations between Washington and Tehran to end the maritime blockade.
President Donald Trump announced a 10-day extension until April 6 to allow Iran to reopen the route. As an incentive, the US will temporarily halt attacks on Iranian energy assets. Trump also claimed that Iran gave a "gift" in the form of the release of 10 oil tankers this week.
However, experts from Rystad Energy warned that the phase of stability in the oil market is now over. After four weeks of absorbing supply disruptions using existing stockpiles, the global system is now moving into a “fragile” phase with no room to absorb new supply shocks.
Data shows that nearly 500 million barrels of liquid have been lost from the global supply chain since the conflict began. With daily disruptions of 17.8 million barrels through the Strait of Hormuz, this instability is expected to continue to drive global energy price volatility in the near term.
