FACTBOX: Oil prices rise on US-Iran Hormuz standoff ahead of ceasefire expiry

Oil prices rose April 20 following the US seizure of an Iranian ship and the continuation of the Strait of Hormuz blockade by the US. The strait is now back to being effectively closed, as expectations fade of a quick resolution of the Middle East crisis.

The US-Iran ceasefire is set to expire April 22, and it is unclear if the next round of peace talks set for April 21 in Pakistan will take place. Trump threatened April 19 that "the United States is going to knock out every single power plant and every single bridge in Iran" if Iran refuses to make a deal. Iran promised to retaliate against the US in response to the Iranian ship seizure.

"Unless relations between the US and Iran improve in the next two days, we could see a resumption of the bombing campaigns from both sides, and more volatility for financial markets," Kathleen Brooks, research director at XTB, said in a note April 20.

Trade flows

The Strait of Hormuz remains effectively closed to most commercial traffic after an open navigation regime lasted for less than 24 hours.

• Eight ships passed the Strait of Hormuz on April 19, down from 29 vessels a day before, according to S&P Global Commodities at Sea.
• The rise in crossings April 18 followed the Iranian foreign minister's declaration that the waterway was open for navigation. Iran said it reasserted control over the strait April 18 due to "repeated breaches of commitments" by the US.
• US Central Command confirmed April 19 that it had seized the Iranian-flagged container ship Touska by firing several rounds after the vessel's crew failed to comply with warnings for violating the US blockade.
• The Indian-flagged vessels VLCC Sanmar Herald and bulk carrier Jag Arnav were reportedly attacked by Iran's Islamic Revolutionary Guard Corps while attempting to exit the strait April 18.
• The International Air Transport Association warned April 17 that flight cancellations in Europe could start taking place from the end of May due to lack of jet fuel.
• The US Department of the Treasury has granted permission for the delivery and sale of Russian crude and petroleum products loaded on vessels through April 17 for a month, but the authorization does not apply to transactions involving Iran, North Korea and Cuba.

Prices

• Crude prices fell April 18 after the announcement of the open navigation regime, but they rose again following Iran's closure of the strait and the US seizure of the Iranian ship.
• The ICE June Brent futures contract rose 3.73% to $93.75/b at 1357 GMT April 20. NYMEX May light sweet crude was up 4.52% at $87.64/b at 1506 GMT.
• The Platts Dubai crude benchmark was assessed at $98.50/b on April 20, down from $102.20/b a day before.
• Platts, part of S&P Global Energy, assessed Dated Brent at $99.26/b on April 17, down from $116.27/b at the previous session. It was the lowest assessment since March 11.
• The VLCC index for non-scrubber-fitted non-eco ships rose 0.24% to $300,152/d on April 17.

Infrastructure

There were no announcements of new attacks on energy facilities.

• Austria started to release crude from the country's emergency reserves to stabilize the market, the Austrian economy ministry said April 20. The initial tranche of 56,000 mt was delivered to the Schwechat refinery, with another 269,000 mt to be released later.
• Israel's Bazan Group has postponed planned Q2 maintenance at its Haifa refinery because of the war.
• Between damage to fields and pipelines from air strikes, disruptions to shipping and evacuations of oil workers, Middle East crude producers will require months — perhaps more than half a year — to fully restore output once the war ends, promising extended tightness in markets, industry analysts say.
• Around 14.2 million b/d of global oil supply sits in fields that have been disrupted by the war, according to research from S&P Global Energy CERA, and actual volumes offline could grow as the war lengthens and storage fills.