Trump's promise to provide insurance and escort for ships through the Strait of Hormuz stopped the rise in crude oil prices

For 4 consecutive days, the US and Israel have continued joint strikes on Iran, destroying both the military potential and the leadership of the Iranian regime. It has already become clear that the Iranian military will not be able to close the Strait of Hormuz, although they are trying to attack individual ships. Therefore, yesterday, President Trump ordered the US Development Finance Corporation to provide risk insurance and guarantees for ALL maritime trade passing through the Persian Gulf, and also declared the readiness of the US Navy to escort tankers through the Strait of Hormuz to ensure the safe supply of energy resources to the world.

May Brent crude futures rose another 4.5% to $81.5/barrel yesterday (+15% for the week), but fell slightly at the end of the session. Markets are hopeful that traffic through the strait will not be blocked and will resume quickly.

“China calls on all parties to immediately cease military operations, avoid escalating tensions, and ensure the safety of shipping in the Strait of Hormuz,” said Mao Ning, a spokeswoman for the Chinese Ministry of Foreign Affairs.

Iran previously exported about 2 million barrels of oil per day, of which 90% was purchased by China, which accounted for 13% of China’s seaborne imports. Therefore, China is also warning Iran about the need to maintain free navigation in the Persian Gulf.

Qatar, due to Iranian drone attacks, has stopped production and exports of liquefied gas, which are also important to restore, as the country provides 20% of the world’s liquefied gas supplies and is the world’s second largest exporter after the United States. Qatar plays an important role in balancing the needs of the Asian and European markets, and Asian buyers account for 82% of the customer base of state-owned QatarEnergy.

Yesterday, unidentified drones off the coast of Libya hit the sanctioned Russian LNG tanker Arctic Metagaz, which belongs to the Russian shadow fleet. After the strikes on the port of Novorossiysk, this confirms that Russia will not be able to take advantage of the sharp increase in gas and crude oil prices.

Global stock indices are falling amid rising crude oil prices and a slowdown in trading activity, but Asian markets, which depend on Middle Eastern crude oil and gas supplies, have been hit hardest (-2-4%), so we can expect more political pressure on Iran (including from China) to speed up the signing of a peace deal between Iran and the US. South Korea’s stock market fell by more than 7%, its third-biggest loss this century.