Oil: Brent retraces gains on fragile ceasefire – Rabobank

Rabobank strategist Molly Schwartz notes that Brent Oil traffic through the Strait of Hormuz remains constrained despite a nominal ceasefire between the US and Iran. War insurance costs have risen sharply and shipowners are being advised to pause Hormuz voyages. Brent crude briefly traded above $80/bbl before retracing to around $76/bbl as markets stayed optimistic.

Hormuz risks and Brent price swings

"According to Bloomberg, the Joint Maritime Information Center said that traffic through the Strait remains at “reduced levels,” (around 24% of pre-war transit) even though US-assisted vessel transits have been largely uninhibited."

"Reuters reports that “some war insurers advise shipowners to pause Hormuz voyages after attacks,” adding that “war insurance for ships inside the Gulf has already ticked higher towards 3% of a vessel’s value, up from 2% at the end of last week.” Meanwhile, quotes for coverage as high as 5% are still circulating."

"Initial reports suggest that the power plant itself was not hit. Brent crude oil prices did not move in reaction to the announcement."

"Oil markets, however, remain as optimistic as ever. While Brent crude climbed by roughly $8, briefly trading above $80/bbl for the first time since 22 June, more than half of that move was retraced yesterday, with prices closing at around $76/bbl."