Oil prices rose Monday as the market reacted to the prospect of continued disruption to supply as it became clear the Strait of Hormuz — the world’s most important energy chokepoint — would remain closed for now. File photo by Divyakant Solanki/EPA
May 11 (UPI) — Global oil prices jumped overnight after U.S. President Donald Trump said an Iranian counteroffer to a 14-point U.S. plan to end the war was “totally unacceptable.”
Brent crude, the international benchmark, rose by more than 4% to $105.50 a barrel, while West Texas Intermediate hit $99.80, up 4.4%, as the market reacted to the prospect of continued disruption to supply.
Prices retreated slightly in European trade after markets there opened, with the Brent contract changing hands mid-morning in London on Monday at $103.95 and American crude at $97.59.
“While there’s some expectation that a major reignition of the war is less likely, given the U.S. claims a cease-fire is still in place, severe supply constraints of commodities are set to continue. With the crisis now into the 11th week, consumers, companies and countries are having to adapt to a world of constrained supplies, said Susannah Streeter, chief investment strategist at the Wealth Club.
Sparta Commodities CEO Felipe Elink Schuurman told CNBC the economic impact could be as bad as during the COVID-19 crisis.
“In 2020, on average, we lost 9 million barrels per day of demand versus 2019, which is pretty much the equivalent of what we are losing now in terms of supply. So, the market will have to adjust, and we will have to get to that level of demand destruction,” said Schuurman.
“Now the question is ‘where is that demand destruction going to come?’ And unfortunately, it’s going to be a situation where the richer countries are going to pay up. Maybe you don’t see $200 [per barrel] on crude, but you will see that on a regular basis on products, which is what people consume. You are going to end up in a scenario where poorer countries are going to have a humanitarian crisis, Europe is going to have an economic crisis and the U.S., a political one,” he added.
Posting on his Truth Social platform on Sunday night, Trump said he was very unhappy with Tehran’s response, which demands an end to U.S. sanctions and the naval blockade of its ports, an immediate end to the war with and a guarantee of no future attacks by the United States and Israel — separate from other conditions in the U.S. proposal, including Iran’s nuclear program.
“I have just read the response from Iran’s so-called ‘Representatives.’ I don’t like it — TOTALLY UNACCEPTABLE,” wrote Trump.
The U.S. proposal was reported to have included Iran handing over its 440 kilogram stockpile of highly enriched uranium, a freeze on nuclear enrichment for up to 20 years and the dismantling of its nuclear facilities.
About the Author
