Oil Traders Have Bigger Worries Than Tankers in Hormuz Strait

Oil tankers in the Gulf of Oman and in the US in flames pointing at Iran should be enough to drive up the price of the world’s most important commodity.

Instead, oil prices have barely moved. Traders do not buy into the theory that Iran wants a war, but they are worried about demand.

Rated by a Price Reporting agency – the world’s leading oil benchmark – Brent rose over 4% after the June 13 attacks, trading just above $ 62 a barrel for a brief period.

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At first glance, this modest rise does not reflect the risk of nearly one-fifth of the oil shipped across the Strait of Hormuz, a narrow channel separating Iran from the Arabian Peninsula.

“I see the limited reaction in the crude oil market as an indication of traders saying ‘hang on a minute’,” said Ole Hansen, head of commodity strategy at Saxo Bank. Adding “If Iran did this it would be an open invitation to the US to step up its involvement and that should have sent the price much higher.”

In support of Hansen’s stance, crude oil futures fell early in the week, with Brent falling below $ 60 a barrel for the first time since the end of January, after data showed an unexpectedly strong increase in US oil reserves.

The combination of rising inventories, sluggish demand growth and fears of a slowing global economy has been enough since May to lower the value of one barrel of Brent crude by $ 13, despite the recent attacks on oil shipping and Middle East infrastructure.

Iran was accused last month of planning illegal attacks on tankers off the coast of Fujairah in the United Arab Emirates. Tehran rejects responsibility, despite Iranian officials threatening to close down on Hormuz in response to US sanctions preventing Iran from oil export.