On Monday, June WTI crude oil prices rose by $4.48 (+4.39%) to close at $106.42, while June RBOB gasoline prices increased by $0.1430 (+3.98%). This rebound follows overnight losses and is attributed to increased tensions in the Strait of Hormuz, particularly after an Iranian drone attack at the UAE’s Fujairah oil industry zone and a cargo ship from South Korea being attacked in the same area.
The U.S. Central Command reported active military engagement against Iranian drones and missile threats as it facilitated the passage of U.S.-flagged vessels through the Strait, a critical transit route for about 20% of the world’s oil supply. Goldman Sachs estimates that crude output in the Persian Gulf has been reduced by 14.5 million barrels per day (bpd) due to ongoing conflicts, contributing to a significant global energy crisis.
As of April 13, the U.S. has imposed a blockade on vessels passing through the Strait of Hormuz that have ties to Iranian ports, further tightening supply amidst reports of $500 million bbl drawn down from global crude stockpiles, which could escalate to a billion by June. OPEC’s crude production has also seen a decline, falling by 7.56 million bpd in March to a 35-year low.
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