Oil Climbs on Hormuz Standoff as Stocks Fluctuate

Anastasia Amoroso, Chief Investment Strategist: Private Wealth at Partners Group, breaks down current market moves including a focus on energy and AI.

A flare-up in tensions over the Strait of Hormuz sent oil higher as stocks fluctuated on concern that a prolonged closure of the waterway could worsen energy disruptions, boosting inflation and slowing the economy.

The standoff drove Brent to $103. A record-breaking rally in the S&P 500 wavered, with traders also sifting through earnings. Software shares got hit as International Business Machines Corp. and ServiceNow Inc.’s results failed to assuage concerns about artificial-intelligence disruption. Tesla Inc. slid after boosting its spending plan. Texas Instruments Inc. jumped on a strong forecast.

President Donald Trump ordered the US Navy to shoot any boat putting mines in the strait, while the military said it intercepted two oil supertankers that tried to evade its effort to prevent passage to and from Iran’s ports. US forces boarded a supertanker carrying Iranian oil in the Indian Ocean.

Iran noted it will not take part in negotiations while a US naval blockade on its ports is in place, and Iran state TV cited the foreign ministry as saying its armed forces are ready to respond to further threats.

Traffic through the Strait of Hormuz remains largely frozen, with only occasional movements of Iran-linked vessels breaking the lull.

“Risk appetite is starting to fade again,” said Fawad Razaqzada at Forex.com. “There’s a fair bit of uncertainty when it comes to diplomacy between the two sides. Less comforting is the ongoing lack of clarity around the Strait of Hormuz. With no clear plan to reopen it, uncertainty remains elevated.” US forces boarded a supertanker carrying Iranian oil in the Indian Ocean as the navy steps up its blockade of the Islamic Republic’s shipping.

The overnight maneuver involved the sanctioned vessel Majestic X, the Pentagon said in a statement on X. The ship is also known as the Phonix, a Very Large Crude Carrier able to transport 2 million barrels of oil, and industry databases show it sailing under a false flag.

As well as turning back freighters that are attempting to leave the Persian Gulf, the US is blocking and boarding carriers thousands of miles from Iranian waters. That’s depriving Tehran’s customers, by far the biggest being China, of millions of barrels of supply.

For America’s blockade to work, it needs to inflict enough economic pain on Tehran that it’s forced to accept US demands. At the same time, though, Iran continues to block almost all shipping through the Strait of Hormuz, crushing oil supply to the global market and jeopardizing economic growth the world over. Tehran continues to keep Hormuz effectively closed, preventing the passage of hundreds of millions of barrels of oil and fuel as well as other commercial traffic.

Read: HORMUZ TRACKER: Shipping Near Total Freeze as US Blockade Holds

As of Thursday morning, only one Iran-linked bulk carrier was observed making the transit out of the Persian Gulf, according to vessel-tracking data compiled by Bloomberg.

Ships Attacked

On Wednesday, Iran attacked at least three vessels in the waterway, diverting two of them into its waters.

The boarding of Majestic X follows interdictions against the VLCCs Hedy and Hero II.

Both are anchored at Chabahar, an Iranian port on the Gulf of Oman, after being intercepted earlier this week, US Central Command said Wednesday on X. Analytics firm Vortexa previously said that the carriers had moved into the Arabian Sea, testing an American blockade that began early last week.

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