International oil prices rose on Thursday as geopolitical risks reignited

International oil prices rose on Thursday (25th). (Bloomberg file photo)

[Financial Channel/Comprehensive Report] A cargo ship off the coast of Oman was attacked by a UFO. After the incident, U.S. officials accused Iran of opening fire on merchant ships trying to cross the Strait of Hormuz, which turned the market's focus back to geopolitical risks, triggering market concerns about the safety of shipping in the Strait of Hormuz and the recovery progress of crude oil supply in the Middle East, pushing international oil prices to rise on Thursday (25th).

Brent crude oil futures closed up $1.52, or 2.1%, at $75.26 a barrel.

U.S. West Texas Intermediate (WTI) crude oil futures in New York closed up $1.58, or 2.3%, at $71.92 a barrel.

The day before, Brent crude oil futures and New York West Texas Intermediate crude oil futures both fell to their lowest levels since February 27, mainly due to the rapid recovery of crude oil transportation in the Strait of Hormuz after the temporary ceasefire agreement between the United States and Iran. The market once believed that the war risk premium had subsided significantly.

However, Reuters' latest report said that after the market closed, two U.S. officials said that Iran fired projectiles at a cargo ship passing through the Strait of Hormuz, which had earlier reported being hit by a UFO. Iran stated that the safety of all ships that do not sail in accordance with officially designated waterways cannot be guaranteed.

After the incident, the United Nations International Maritime Organization (IMO) announced that it would suspend the escort plan that originally helped ships and crews safely pass through the Strait of Hormuz, further deepening market concerns about the recovery progress of energy transportation in the Middle East.

Energy consulting company Rystad Energy pointed out that currently about 50% to 60% of the capacity of crude oil storage tanks in countries along the Persian Gulf has been filled. If tanker traffic cannot return to normal in the short term, oil-producing countries will be forced to reduce production, and the overall supply recovery schedule may be delayed until 2027.

Analysts pointed out that this round of rebound in oil prices was not only stimulated by geopolitical events, but also related to technical factors.

Energy consulting firm Gelber & Associates said that after the recent rapid decline in oil prices from highs, the market has entered an oversold range. In addition to reflecting hedging demand, this rebound is also accompanied by short covering and bargain hunting. Despite rising oil prices on the 25th, Brent and New York West Texas Intermediate crude oil have remained in technical oversold territory for more than a week.

In addition to the situation in the Middle East, a strong earthquake recently occurred near Caracas, the capital of Venezuela, causing heavy casualties. The market is worried that the disaster may slow down the recovery of Venezuelan crude oil exports that the U.S. government originally expected.

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