On Monday morning, the price of Brent crude hit US$63.26, while West Texas crude was selling for US$56.90.
Brent crude prices have remained steady while US/Iran tensions have reached a tipping point.
Conflict between Iran and the western world hit a fever pitch on Friday (July 19), when the Middle Eastern country seized Stena Impero, a UK oil tanker, in the Strait of Hormuz.
On Monday (July 22) morning, the price of Brent crude hit US$63.26 a barrel, while West Texas crude was selling for US$56.90 a barrel.
Iran’s capture of the British ship is the latest move aimed at the US and its sanctions against the country, which keep Iranian oil off the market.
The foreign minister of Iran took to Twitter (NASDAQ:TWTR) early Saturday (July 20) morning to explain the motivation behind the ship seizure, citing the Friday decision to grant Gibraltar the power to keep Iran’s Grace 1 oil tanker for an additional month.
The Iranian vessel was taken over on July 4, and is being accused of shipping some 2.1 million barrels of oil to Syria, a direct violation of sanctions against the countries.
Unlike the piracy in the Strait of Gibraltar, our action in the Persian Gulf is to uphold int’l maritime rules.
As I said in NY, it is IRAN that guarantees the security of the Persian Gulf & the Strait of Hormuz.
UK must cease being an accessory to #EconomicTerrorism of the US.
— Javad Zarif (@JZarif) July 20, 2019
Some speculate that the capture of Iran’s ship came at the behest of the US, and now American allies France and Germany have called for the release of the British ship and condemned Iran’s actions.
In previous years, these escalating tensions would have driven the price of Brent crude higher over fears of a supply shortage. However, as the US asserts itself as the leader in shale oil production, the precarious nature of international oil shipments is less impactful on global prices.
Currently, crude is the top performing commodity, up 28.76 percent for the first half of the year.
During a recent meeting of the Organization of the Petroleum Exporting Countries (OPEC), the group confirmed it would modestly up production for member countries.
OPEC also projected that non-OPEC nations will increase output by more than 2 million barrels per day, ramping up to 2.4 million barrels per day in 2020.
While the rest of world watches to see how the tensions between Iran, UK and the US play out, the price of oil looks to remain stable amid the uncertainty.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.