The Iranian Navy briefly seized an oil tanker near the Strait of Hormuz. Yahoo Finance’s Alexis Christoforous, Brian Sozzi, and Jared Blikre discuss the details and how it’s impacting oil prices.
ALEXIS CHRISTOFOROUS: An Iran-operated navy helicopter boarded and then briefly seized a Liberian-flagged oil tanker yesterday near the Strait of Hormuz. That's according to the Associated Press. The Iranian navy held a vessel for about five hours before releasing it. Yahoo Finance's Jared Blikre is here for more.
So Jared, give us the details. What do we know here? We're also showing some black and white video of special forces roping down from a helicopter. What effect, if any, is this having on the oil markets?
JARED BLIKRE: Well, oil has been slightly elevated. I don't think that this is the single-biggest driver right now. We have a lot of other factors in play.
But we can remember last year when we had tensions rising in the Gulf, particularly around the Straits of Hormuz-- that's where one fifth of the world's traded oil passes through. It's an incredibly important channel that's very narrow. And if tensions do rise in this area, it does have an effect on oil generally. But given the limited scope of this and we know so far, I don't think it's really affected the price just yet. But we definitely do need to monitor this.
ALEXIS CHRISTOFOROUS: Now something that can move prices, we know, are these reports we get weekly. IEA out with a report saying that demand for oil this year worse than expected.
JARED BLIKRE: Yeah, they're actually reducing their demand expectations throughout 2021. That's the end of next year. The steepest downgrades are coming with the two quarters that are finishing this particular year. And they're saying that yes, 500,000 barrels per day, that is the demand cut estimate.
But they're also saying that supplies in or outside of OPEC should increase by 500,000 barrels a day. Now that would be bearish on prices, as would that reduced demand forecast. But we can see crude oil here is up-- or excuse me, down only about 16 basis points.
Just checking out some of the charts here-- so this is the overnight price action, kind of zigzagy, sideways action. But if we look over the last two months, once oil was able to break above 40-- that was right here in June-- it's really stayed nicely above this important threshold. So maybe some of the tensions in the Gulf right now are contributing to the oil increase here.