The price of oil starts to rise again and exceeds 113 dollars a barrel, driven by tensions between the United States and Iran which are fomenting the crisis in the Strait of Hormuz.
At the start of the week, WTI rose to 113.69 dollars (+1.93%), while Brent stood at 110.67 dollars (+1.64%). The decision of the OPEC+ countries to increase production is based on this scenario.
Trump’s ultimatum to Iran
Above all, the statements of American President Donald Trump are weighing on the markets, as he issued an ultimatum to Tehran threatening attacks against energy infrastructures in the event of a failure to reach an agreement or a blockade of traffic in the strait.
Donald Trump has set a new deadline for the reopening of the Strait of Hormuz, indicating Tuesday as the deadline at 8:00 pm (US eastern time zone). The new postponement follows a series of deadlines previously set and then postponed. And Trump has confirmed in several telephone interviews his intention to bomb again if an agreement is not reached by then.
The new deadline comes after a previous social post with very harsh tones:
Tuesday in Iran will be Power Plant Day and Bridge Day, all in one day. There will be nothing like it!!! Open the damn Straits, you crazy bastards, or you will live in hell – YOU WILL SEE! Praise be to Allah.
The world views the Strait of Hormuz with apprehension, through which about a fifth of the global supply of oil and liquefied natural gas passes. Any disruption or tension in the area produces a domino effect on prices and market volatility, as well as on the final prices of goods and services. In other words, Hormuz has the power to trigger an inflationary spiral.
American threats and the risk of escalation with Iran fuel further investor fears.
All things considered, the closure of the Strait of Hormuz caused an estimated supply disruption of up to 15 million barrels per day (15% of global production).
OPEC+ increases oil production
Meanwhile, the OPEC+ countries have decided to increase production again by 206,000 barrels per day starting from May, replicating the increase already adopted for April.
However, the alliance (which includes Saudi Arabia, Russia and other producers) has issued a warning: the reconstruction of energy plants damaged by the war will be long and expensive, with possible repercussions on global supply. And without the security of sea routes, the stability of the markets cannot be guaranteed. Speaking of oil, the fundamental point does not just concern production, since the main producing countries in the area are unable to export more due to the conflict with Iran. Without production, the actual ability to export oil depends on the safety of ports, terminals, pipelines and naval routes.
And although some countries are looking for alternative exit routes, these represent only a partial solution that does not compensate for the loss of main routes.
OPEC+ confirmed that the strategy remains gradual and reversible. The group will meet again on May 3 and June 7 to monitor a crisis that, for now, continues to support rising prices.
The price of oil from February to today
The current level of costs marks a sharp jump compared to the end of February, when WTI was at $67 and Brent at around $72, with dramatic increases in fuel prices.
Already in recent days, prices had recorded double-digit increases following Trump’s statements, with WTI increasing by more than 11% in a single session.
