Source: Forex News
Crude oil is one of the most
sensitive commodities in the world. The liquid is mined in most countries in
the Middle East, a region that is not well-known for peace. This was evidence
yesterday, when two large oil tankers were attacked. One tanker was attacked
with torpedoes while the other one was repeatedly attacked but none of the
tankers was at risk of sinking.
The attack on the tankers, one of
which was Japanese, came shortly after Japan’s Shinzo Abe met with Iran’s
leader, Hussein Khamenei. In a statement by the US Secretary of the State, the
US blamed Iran for the attacks but he provided no evidence. He said:
Taken as a whole, these
unprovoked attacks present a clear threat to international peace and security,
a blatant assault on the freedom of navigation, and an unacceptable campaign of
escalating tensions with Iran.
In response, Iran denied
responsibility of the attacks. In a statement, the country’s foreign minister,
Javad Zarif, said that the country was not responsible for the attacks. He
warned the region not to fall into a trap caused by external actors. By this,
he was blaming countries like the United States for provoking tensions in the
Tensions in the Middle East,
particularly at the Strait of Hormuz would be tragic to the world economy. This
is because two-thirds of all oil transported in the sea passes through these
waters. In fact, after the reports of the attack, the price of crude oil rose
sharply as investors studied the implications.
The current tensions between
United States and Iran started after Donald Trump abandoned the Iran nuclear
deal, which was signed during the Obama era. The administration went against
the liking of the advice of leading security experts and American allies like
Europe and Japan. It also left the deal despite the fact that Iran was
complying with the deal.
As the tensions with Iran have
increased, Donald Trump has continued to believe that he can negotiate a better
deal than the one that was negotiated by Obama. Iran on the other hand has
vowed that it won’t negotiate with the United States. As these tensions have
increased, some in the Trump administration have called for a US attack on the
country. However, Trump has rejected this advice because of the risks of
starting a new war.
In the coming days, the price of
crude oil will likely be in the spotlight as these tensions rise. In addition,
OPEC is expected to meet in the coming days to deliberate on the future of the
supply cuts. Recent reports suggest that OPEC+ members will accept to extend
the supply cuts with the goal of supporting the price of crude oil. The chart
below shows the performance of Brent and WTI crude oil after the attack.
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