Oil Prices Near $104 as Strait of Hormuz Dilemma Persists

SadaNews - Oil prices rose as conflicting statements emerged from the United States and Iran regarding efforts to end the war that has led to the closure of the Strait of Hormuz and a significant reduction in oil production, raising fears of a global energy crisis.

The price of Brent crude exceeded $104 per barrel after losing more than 2% on Wednesday, while West Texas Intermediate was trading near $92.

While the White House confirmed ongoing peace talks, Tehran rejected U.S. initiatives and proposed its own conditions, including imposing sovereign control over the vital waterway.

In Iran, parliament is working on a bill to impose fees for providing security for ships crossing the strait, according to the semi-official Fars news agency. The agency reported that the plan is expected to be finalized next week, citing a lawmaker whose name was not disclosed.

Supply Shock Drives Prices Up

Global benchmark crude is heading for its largest monthly gains since 1990, as the intensity of the conflict in the energy-rich Middle East escalates, sending shockwaves through the global economy, particularly affecting Asia.

The near-total closure of the Strait of Hormuz has resulted in the loss of millions of barrels per day in production, alongside rising prices for oil products from diesel to jet fuel.

In another conflict zone, traders are monitoring the war between Russia and Ukraine and its risks to supplies. A Turkish oil tanker carrying Russian Urals crude was attacked by a drone in the Black Sea near Istanbul, according to NTTV.

Rob Capito, CEO of BlackRock, noted that investors may have underestimated the risks of the conflict. He added that oil prices could rise to $150 per barrel, even if "the war is declared over tomorrow," as restoring supply chains to full capacity will take time.

Late Wednesday, U.S. President Donald Trump reiterated that the United States is in talks with Tehran, stating during a fundraising event in Washington: "They want to make a deal badly, but they are afraid to say so."

Separately, the Wall Street Journal reported that Trump has informed close aides in recent days that he hopes to end the conflict in the coming weeks.

The White House had combined diplomatic offers with threats of a new wave of attacks in the war that Washington initiated with Israel in late February. White House spokesperson Caroline Levitt stated that Trump "is not joking and is ready to unleash his wrath."

Military Movements Increase Ambiguity

Although Trump has not announced clear plans, informed sources stated that the U.S. Department of Defense ordered the deployment of two Marine units to the region, consisting of about 5,000 troops along with aircraft and amphibious vehicles. An informed person mentioned on Tuesday that Trump is also sending over 1,000 soldiers from the 82nd Airborne Division.

Traders remain focused on the strait, where ship movements through this corridor connecting the Arabian Gulf to global markets are reduced to a minimum. Vessels seeking safe passage are required to provide lists of crew and cargo, along with voyage details to obtain approval from the Revolutionary Guard.

Aaron Stein, head of the Foreign Policy Research Institute, stated: "Iran controls the strait, and he (Trump) needs it to be open." He added: "He can achieve that through consensus or coercion, and he is trying to combine both options."

Sultan Al Jaber, CEO of the UAE's ADNOC, said Iran's actions destabilize the global economy. He added during an event in Washington: "Turning the Strait of Hormuz into a weapon is not an act of hostility against one nation, it is economic terrorism against every country and every family."

Global Ramifications and Broader Crisis

As the conflict continues and Israel executes new strikes on targets in the Iranian city of Isfahan, governments across Asia are preparing for the worst-case scenarios.

Thailand raised gasoline prices by up to 22% on Thursday, and the Philippines halted the wholesale electricity market, while farmers in India and China face rising agricultural input costs.

In the United States, where fuel prices have surged significantly, administration officials are considering the implications of oil prices possibly rising to $200 per barrel, according to informed sources, indicating that senior officials are assessing extreme scenarios.

Meanwhile, Washington announced the rescheduling of a summit between Trump and Chinese President Xi Jinping to be held in Beijing on May 14 and 15, a much-anticipated meeting that follows a postponement that has increased uncertainty in relations between the world's two largest economies.

In the latest trading, the price of Brent crude for May futures rose by 1.9% to $104.15 per barrel at 1:43 PM in Singapore, while the more actively traded June contracts increased by 1.7% to $98.86. Meanwhile, futures contracts for West Texas Intermediate for May delivery rose by 2.1% to trade at $92.21 per barrel.