#global-oil-markets

#global-oil-markets

A 'workable system' of transit and shipowner confidence in the security of the transiting vessels is essential. This includes availability of insurance for transiting vessels, facilitating commercial trade financing, and sustained outbound vessel transits through the Strait of Hormuz.

Three supertankers laden with oil have passed through the Strait of Hormuz amid the fragile truce between the United States and Iran, according to shipping data. Iran's blockade of the strait has disrupted global energy supplies and sent oil prices soaring since the start of the US and Israel's war on Iran.

The sharp decline in oil prices following the announcement played a key role in lifting sentiment. Lower energy costs could help ease inflation pressures and support both consumer demand and corporate margins.

Major indices, including the Nasdaq Composite, S&P 500, and Dow Jones Industrial Average, all recorded gains, with the Nasdaq delivering its strongest weekly performance since November.

The reopening of Hormuz is critical to the world's oil trade because its closure has resulted in the loss of millions of barrels of supply to global markets. A resumption would alleviate pressure on increasingly tight physical markets everywhere.

The so-called 'petrodollar' system wasn't well understood for most of this time, but a secret deal between Henry Kissinger and Saudi Arabia ensured the dollar would remain the dominant reserve currency.

Japan will release starting in early May the equivalent of roughly 20 days' worth of oil from the national reserves to ensure the stable supply of crude oil.

Under the current ceasefire, fewer than 15 ships per day are permitted to transit the Strait of Hormuz. This movement is strictly contingent upon Iran's approval and the enforcement of a specific protocol.

The FTSE 100 once again remains a leader in Europe, although the pullback in oil and precious metals has meant that commodity stocks are lagging behind as financials take the lead. Strong gains for the likes of HSBC, Barclays, and NatWest bring a recovery from a sector that has been hit by Trump's recent move to limit credit card interest rates to 10%.

It may be too late for Trump to negotiate from a position of strength with Iran. The conflict has raised the risk of a worldwide recession.

The war has effectively blocked the Strait of Hormuz, the world's most important oil route, since the end of February and cut exports from OPEC+ members Saudi Arabia, the United Arab Emirates (UAE), Kuwait and Iraq.