The price of Brent crude oil briefly surged past US $126 a barrel early on Thursday as stalled US-Iran talks raised doubts over the reopening of the Strait of Hormuz and a permanent end to the Iran war.
Brent crude to be delivered in June jumped 3.3 per cent to USD 121.90 after briefly soaring past USD 126 per barrel. Brent to be delivered in July rose 1.4 per cent to USD 112.02. Benchmark US crude climbed 1.3 per cent to USD 108.28 per barrel. Before the war began in late February, Brent crude was trading around USD 70 per barrel.
There’s no clear path to an end to the war. The US has continued its blockade of Iranian ports while the Strait of Hormuz is closed, pushing oil prices higher. Thursday’s reports suggesting a possible escalation by US President Donald Trump doused hopes for a quick end to the conflict.
“The breakdown of talks between the US and Iran, along with President Trump reportedly rejecting Iran's proposal for a reopening of the Strait of Hormuz, has the market losing hope for any quick resumption in oil flows,” ING Bank 0strategists Warren Patterson and Ewa Manthey wrote in a research note.
Oil prices vary depending on the type of crude oil, where it is being traded and under what terms, for futures contracts. By some measures, Brent has hit its highest level since its peak of USD 147.50 per barrel in 2008 during the global financial crisis.
The dollar has gained against other major currencies partly due to its status as a safe haven for investors in times of risk, and partly because US interest rates have remained relatively high as the Federal Reserve strives to balance a need to boost the economy with curbing the higher prices that partly are a result of the war. The Fed's decision to keep interest rates steady at its policymaking meeting Wednesday further supported the dollar.
Also read: Crude oil tops $120 a barrel
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