It's been wild ride in crude over the past few days with Brent crude futures were capped near $84 a barrel on Tuesday afternoon before sliding down to the $81 level late Wednesday afternoon, only to surge back up to $84 this morning...
...as shipping industry insiders and Wall Street analysts await exact details on the Trump administration's proposal to keep tankers transiting the Strait of Hormuz. The critical maritime chokepoint remains paralyzed, raising the risk of an energy shock in parts of the world that rely heavily on those flows, particularly in Asia.
President Trump wrote in a Truth Social post that the U.S. will provide insurance for "ALL Maritime Trade" through the U.S. Development Finance Corporation (DFC) and will provide Navy escorts "if necessary."
The shutdown is already hitting global energy flows:
QatarEnergy Declares Force Majeure As One-Fifth Of Global LNG Supply Goes Dark
Oil Spikes To Session High As Iraq Starts Shutting Output At Massive Oil Field
Now comes the hard part, with the shipping industry and Wall Street analysts all asking the same question: how will every tanker transiting the Arabian Sea through the Gulf of Oman, into the Strait, and onward to the Persian Gulf be protected by U.S. or allied air or naval forces?
"Nothing is sure and we need immediate clarity," said Khalid Hashim, managing director of Precious Shipping Pcl, a Thai firm that owns bulk carriers.
Hashim said, "Lives are at risk, cargoes are at risk, ships are at risk. We need immediate cover that protects us from all this."
While some shipowners say they're mulling over joining escorted convoys, many remain very cautious, noting that escorts do not eliminate the risk of the IRGC's asymmetric warfare, such as the use of drones.
Source: ZeroHedge News
