Oil rises on risk of escalation after US seizes Iranian tanker

Oil prices jumped more than 5% on Monday, April 20, on concerns that a ceasefire between the United States and Iran could collapse after the US seized an Iranian cargo ship.

This was reported by Economic Pravda with reference to Reuters.

The report said that Brent futures rose by USD 5.08, or 5.62%, to USD 95.46 a barrel, while US West Texas Intermediate was trading at USD 88.86 a barrel, adding USD 5.01, or 5.97%.

On Friday, both contracts fell 9%, their biggest daily drop since April 18, after Iran said the Strait of Hormuz was open to all commercial shipping until the end of a ceasefire.

In turn, US President Donald Trump said Iran had agreed never to close the strait again, through which about a fifth of the world's oil supplies passed before the war began almost two months ago.

"Within 24 hours of Friday's 'full opening' announcement, tankers were already being fired on by the Islamic Revolutionary Guard Corps (IRGC)," said Sparta Commodities analyst June Goh.

"The fundamentals of the market are deteriorating as 10-11 million barrels of crude per day remain closed," Goh added, referring to the loss of oil production.

The United States said on Sunday it had seized an Iranian cargo ship that was trying to break its blockade, while Iran said it intended to retaliate, raising fears of renewed fighting.

Tehran also said it would not participate in a second round of talks that the United States had hoped to start before the end of a two-week ceasefire this week.

It is noted that, according to Kpler, more than 20 ships carrying oil, liquefied petroleum gas, metals and fertilizers passed through the strait on Saturday.

This is the largest number of ships to cross the waterway since March 1.

As Ukrainian News Agency earlier reported, on Friday, April 17, oil prices fell amid optimism that the conflict in the Middle East may be nearing an end after a 10-day ceasefire between Lebanon and Israel came into effect.