US oil prices may cross $100 as Iran restricts Strait of Hormuz, surge odds hit 44%

Chances of US oil prices going above $100 per barrel this month have jumped to 44%, according to The Kobeissi Letter. Iran has again tightened control over the Strait of Hormuz, which carries a huge part of the world’s oil. Iranian gunboats fired at a tanker trying to pass through the strait on Saturday, according to UK maritime authorities.

Another oil vessel was hit by a projectile in the same area, as reported by maritime agencies. Iran’s military said restrictions are back because of “repeated breaches of trust” by the US. Iran’s Khatam al-Anbiya command said the strait is now under “strict management and control”. Iran said restrictions will continue unless the US ensures full freedom for Iranian ships. Ships linked to the Islamic Revolutionary Guard Corps were involved in firing and control operations.

Oil price risk rises

Iran had briefly reopened the strait after a ceasefire deal, allowing oil tankers to pass. Iran reversed that decision after the US said its blockade of Iranian ports will continue. Donald Trump said talks are progressing but warned the US won’t accept “blackmail” over the strait. Iran said it is reviewing new US proposals after talks through Pakistan. A second round of peace talks may happen soon, but the US has not confirmed it.

US Iran talks continue

Several key disagreements between the US and Iran are still not solved. Oil prices had dropped sharply when Iran first reopened the strait, as stated by CBS News report. US crude dropped 9.4% to about $82.59 per barrel after reopening news. Brent crude also fell to around $90.38 per barrel. More oil supply reduces pressure on prices globally. S&P 500 rose 1.1% as investors became hopeful. Dow Jones Industrial Average surged up to 1,100 points during trading.

Markets reactation

Nasdaq Composite also increased by about 1.3% (market data). Lower oil prices reduce inflation and help businesses and consumers. United Airlines stock jumped around 7% as fuel costs may fall. Norwegian Cruise Line and Royal Caribbean Group gained strongly due to cheaper fuel outlook. Lennar shares rose as lower rates may help buyers. Carvana climbed as cheaper loans can increase demand.

Lower oil prices reduce inflation pressure across goods and services. This could push the Federal Reserve to cut interest rates in future. But with Iran tightening control again, oil supply risk is back. If tensions continue and the strait stays restricted, oil prices could spike again above $100 per barrel this month, as per The Kobeissi Letter estimate.

FAQs

Q1. Why are oil prices rising again?

Oil prices are rising because Iran has tightened control over the Strait of Hormuz, which is a major route for world oil supply.

Q2. Can oil prices cross $100 per barrel soon?

Yes, chances have increased to 44%, according to The Kobeissi Letter, due to rising tensions between Iran and the US.