No Normalisation Yet: Oil Rebounds as Hormuz Tensions Escalate
GFN – LONDON: Oil prices rebounded nearly 3% on Friday to just below $103 per barrel after renewed clashes between US and Iranian forces in the Strait of Hormuz reversed three consecutive sessions of losses, while falling refined product inventories across Europe and Asia signalled tightening supply conditions.
ICE Brent and NYMEX WTI moved higher in early Friday trading following reports that Iran fired on three US Navy destroyers in the Strait of Hormuz, prompting retaliatory US strikes on Iranian military targets, according to ING Bank’s commodities strategy division.
The US has signalled no immediate intent to intensify the conflict and is reportedly awaiting Iran’s response to a proposal to reopen the trade route. Refined product stocks in the Amsterdam-Rotterdam-Antwerp region fell 108,000 tonnes week-on-week to 4.5 million tonnes in the week ending 7 May, with gasoil declining for a fifth consecutive week to its lowest level since August 2025, Insights Global data showed.
Naphtha inventories fell to their lowest level since March 2025, reflecting disruption tied to the Strait of Hormuz closure. In Singapore, inventories declined to 44.8 million barrels, the lowest since July 2025.
In natural gas, the US Energy Information Administration reported a storage build of 63 billion cubic feet, below market expectations of approximately 73 billion cubic feet and the five-year average of 77 billion cubic feet, supporting front-month Henry Hub contracts up more than 2% to around $2.8 per million British thermal units.
In metals, the People’s Bank of China reported its largest monthly gold purchase in over a year in April, adding approximately 260,000 troy ounces in its 18th consecutive month of reserve accumulation.
In agriculture, cocoa futures extended gains for an eighth consecutive session, rising approximately 7%, driven by short covering and concerns that developing El Niño conditions could disrupt output across West Africa and Indonesia.
The convergence of energy supply disruption, central bank gold accumulation, and agricultural weather risk reflects the breadth of commodity market exposure to current geopolitical and climatic conditions.