Oil prices in the United States have returned to over $100 early Thursday morning despite the agreed ceasefire between the US and Iran. The US stock market picked up steam yesterday after Tuesday night’s announcement, including oil stocks like Chevron CVX and Exxon Mobil (XOM).
The S&P 500 slipped 0.1% as the United States, Iran, and Israel disagreed on the details of their two-week ceasefire, whose announcement had sent markets flying in optimism on Wednesday. The Dow Jones Industrial Average was down 40 points, or 0.1%, as of 10 a.m. Eastern time, and the Nasdaq composite was 0.2% lower. The oil market was jumpier, and the price for a barrel of benchmark U.S. crude oil climbed 6.8% to $100.79.
Additionally, futures on Brent crude (BZ=F), the international pricing benchmark, gained more than 3% to trade above $98 per barrel, while those on US benchmark West Texas Intermediate (WTI) crude (CL=F) picked up more than 5% to trade above $99 per barrel. This comes as the average gas price in the US has reached $4.116/gallon.
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The Strait of Hormuz, the world’s most critical shipping chokepoint for energy products, has remained essentially closed to through traffic. Only four vessels crossed the Strait of Hormuz on Wednesday after the ceasefire, as details of the agreement on both sides remain testy. There is plenty of confusion over the status of the Strait of Hormuz and what the framework of the ceasefire means for Strait traffic.
Risk and shipping insurance experts, alongside energy analysts who study the Middle East, say that without firm guarantees of safe passage through the Strait of Hormuz from Iran, shipping is unlikely to recover in any significant fashion. Hence, the prices of Oil in the US could continue to climb, meaning more unrest in the global energy markets.