09.04.202609:22 Forex Analysis & Reviews: Oil Giants vs. Iran's Hormuz Initiative: The Battle for Control Over Global Supplies

Oil prices have recovered after the largest one-day drop since April 2020, as the Strait of Hormuz remains largely blocked, and Israeli attacks on Lebanon threaten to derail the fragile ceasefire in the Middle East.

Today, the price of Brent crude oil approached the $97 per barrel mark after a 13% decline on Wednesday. Prices for West Texas Intermediate (WTI) are also trading at around $97. Yesterday, the Iranian semi-official news agency Fars reported that tanker passage through the strait was suspended following Israeli strikes, although U.S. Vice President JD Vance refuted this claim, stating, "We are seeing signs that the straits are starting to open."

It is evident that a new drama is unfolding at the heart of geopolitical battles, where every barrel of oil becomes a bargaining chip in the game between world powers. Many oil companies, whose influence extends far beyond corporate offices, have sharply criticized Iran's ambitious plan regarding the Strait of Hormuz. The initiative proposed by Iran to impose a fee for passage through this vital waterway has sparked outrage among oil magnates, threatening to reshape the landscape of global energy markets.

The core of the oil companies' objections boils down to several key points, each carrying potentially destructive consequences. Firstly, the economic impact. Estimates indicate that the additional costs for each tanker shipment could reach a staggering $2.5 million. This shocking figure clearly illustrates how such a policy could lead to a sharp increase in fuel prices worldwide for consumers. For countries whose economies directly depend on oil production and exports, this could result in a significant financial blow.

Secondly, there is a pressing issue regarding compliance with the sanctions regime. Imposing a fee for passage, if directed to Iran, could violate existing sanctions. This, in turn, carries serious legal and political repercussions for both companies and the states involved in the process. The complex web of international agreements and restrictions might be on the verge of breaking down, sparking a new wave of tension.

Finally, one cannot ignore the factor of a dangerous precedent. If the idea of charging a fee for passage through the Strait of Hormuz is implemented, it could open Pandora's box. Other key maritime routes, such as the Strait of Malacca or the Suez Canal, might follow suit, triggering a cascade of similar fees and complicating global trade and logistics. Oil companies fear that such a practice could become entrenched, turning into a new norm that would make supply routes even more vulnerable and costly.

Regarding the current technical picture of oil, buyers need to overcome the nearest resistance at $100.40. This will allow targeting $106.83, above which breaking through will be quite challenging. The furthest target will be $113.36. If oil prices fall, bears will attempt to take control at $92.54. If they succeed, breaking through this range will deal a serious blow to the bulls' positions and push Oil down to a minimum of $86.67 with the prospect of reaching $81.38.