Markets This Morning
Hostilities between the U.S. and Iran have reignited following days of pause, adding support to the geopolitical risk premium. Energy prices across the curve have stepped up in response to the conflict, deepening doubt of a return to regular shipping through the Strait of Hormuz in the near term. Iran have rejected the Omani proposal to reopen the strait with a voluntary contribution fee for transiting the waterway. UK wholesale gas prices are trading up at 142.75 p per therm having risen 1.82p since the market opened. Crude oil prices are seeing similar movement, the front-month Brent contract has stepped up $2.91 this morning at a price of $87.00 per barrel.
Yesterday in Summary
UK wholesale gas and crude oil prices both fell further on Tuesday as the U.S.-Iran conflict remained paused for a fourth day. Hopes grew for a resumption of Strait of Hormuz shipping following reports of constructive Oman-Iran talks on a voluntary transit fee, supported by other Gulf states. Bab el-Mandeb traffic also improved, hitting a four-day high as shipping recovered from last week’s Houthi attacks on Saudi tankers. U.S. President Trump said talks with Iran were progressing well, though Iran denied this. The NBP front-month contract fell 0.46p to settle at 140.30p per therm. Brent crude fell $4.27 to $84.09 per barrel, its lowest since July 13th.
