Oil climbs as missiles fly in the Gulf

A look at the day ahead in European and global markets from Wayne Cole.

The week started with a bang in Iran as U.S. forces struck two missile launchers on Larak island in the Strait of Hormuz, while Tehran attacked U.S. forces in Jordan. Not helping was a post from President Trump that Kharg Island, Iran's main oil terminal, was being "blown to smithereens", though there was no confirmation of this from the military.

Seems Iran did try to use rockets to lay naval mines in the strait, a challenge to the U.S. military which claimed last week that it had cleared the main passage for shipping.

Problem is, Iran can keep doing this regularly and from anywhere on the shore, suggesting it will be tough for the U.S. to keep the strait clear. Thus Brent quickly climbed 2.4% to back above $90 a barrel, pressuring equity markets.

Yet, there are signs U.S. efforts to escort shipping are bearing fruit with Goldman estimating total Gulf oil exports are running at 15-16 million bpd, 7 to 8 million below pre-war levels, but 5 to 6 million above the March trough. Talk is the ships are travelling at night with their transponders off, and thus not being spotted by ship tracking sites.