Oil futures rebound ahead of Easter long weekend, but move away from highs. Hormuz’s reopening hopes help stocks halt the sell-off. Dollar weakens slightly ahead of March jobs report, gold falls again.
Efforts to reopen Strait of Hormuz boost sentiment
Oil futures rebounded sharply on Thursday as panic over supply shortages gripped markets after US President Trump threatened to hit Iran “extremely hard” in his Wednesday address to the nation. Earlier in the week, hopes that the United States was seeking to conclude its military operations in the Middle East within two to three weeks quickly dissipated. But above all it was a new reality: even if the conflict was to end soon, supply disruptions in the energy market were expected to continue for some time, after Trump signaled that the United States did not need the Strait of Hormuz.
However, hopes for a solution to end the blockade of the crucial oil passage were revived later in the day. The UK held talks with around 40 countries on Thursday aimed at finding ways to restart energy flows across the Strait of Hormuz, discussing the possibility of using sanctions to pressure Iran. Meanwhile, Tehran continued to show that it had the upper hand on the strait after saying it was drafting a protocol with Oman for the two countries to “monitor transit” through the vital shipping lane.
While none of these developments guarantee that safe passage will be restored in the near future, it is nonetheless an encouraging sign that there is a vested interest by all parties in allowing more traffic through Hormuz, which has brought some calm to the markets before traders take a break for Western Easter celebrations.
WTI exceeds Brent, gold stumbles
This lukewarm optimism was reflected in June futures, which closed down “only” 8%, compared to a 12.2% jump for May, indicating a shift in the oil futures forward curve. WTI’s stronger rise in recent days against Brent has also been fueled by a surge in demand for U.S. oil, as buyers rush to find alternative suppliers to Middle Eastern producers.
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