This entire week, geopolitics continued to dominate the crude world and its dynamics. Yet, despite all the drama, oil prices were unable to break through the roof. And that is the moral of the ‘crude’ story today.
Markets that were on an upswing at the end of the last week, began to tumble early this week, on signs that the impact of a tropical storm on US Gulf Coast production was short-lived. Chinese economic data dimmed the demand outlook further. Markets also acted swiftly, selling off crude oil, as soon as signs emerged that both Washington and Tehran appeared inclined to soften their political positions.
Oil prices sank once President Trump and US Secretary of State Mike Pompeo struck a milder tone on Iran. Markets shed a bit more, once Tehran also opted to extend an olive branch to Trump and his administration. Price pressure on the crude markets, however, gained some momentum on Friday, as reports poured in that Iran has seized a British oil tanker in the Strait of Hormuz. The British government said a second, Liberian-flagged vessel was taken as well.
Markets had also strengthened somewhat as reports about the missing UAE tanker MT Riah Emerged which had disappeared from radar earlier in the week, while sailing through Iranian territorial waters in the Strait of Hormuz. Iran’s Islamic Revolutionary Guards Corps (IRGC) later announced that the tanker was being held at its base at Qeshm Island for repairs.
