Since late April, crude oil costs have peeled off over 12%, though mounting tension in the Gulf – with Iran at the center – may present occasional boosts to the sentiment-tied commodity. Ever since US President Donald Trump destroyed the 2015 nuclear pact with Iran, reimposed penalties and dropped waivers for importing Iranian crude, a conflict between Tehran and Washington have dramatically intensified.
Relations between the two significantly acerbated after oil tankers were attacked within the Gulf of Oman, followed by allegations by the US – with Saudi Arabia agreeing – that Iran was behind the assault. Officers in Tehran rejected their involvement in the attack. Adding fuel to the fire, an unpiloted US spy drone was just lately shot down by Iranian navy after the aircraft strayed into their airspace.
Washington opposed the accusation, claiming that the drone was in international airspace. Political risks in the region will probably escalate in light of Washington’s choice to deploy a further 1,000 troops and offense-oriented army hardware and plane like B-52 bombers. In response, Iran has warned to overpower the vein of global oil supplies by disturbing commerce via the Strait of Hormuz.
A long-term rival to Iran and US-ally Saudi Arabia has stated that it’s working with other Gulf states on possible actions to curb what they understand to be “aggressive behavior” from Iran. In a media conference, US President Donald Trump mentioned that everybody would “soon find out” what Washington’s response shall be. The imprecise nature of this feedback opens to the door to more considerable political indecision and levity in crude oil.