US and Iran: This date will be important

Geopolitical tensions between the United States and Iran could intensify following the end of Iran's mourning period for Ayatollah Ali Khamenei on July 9, Rystad Energy reported. The energy consultancy believes this date marks a critical juncture, after which both sides might adopt a more confrontational stance, potentially driving up oil prices.

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The oil market reacted quickly to the renewed geopolitical risk, and Brent crude rose to its highest level since June 19.

Recent military exchanges between the US and Iran, despite a 60-day ceasefire agreement in June, have already impacted global oil markets. Brent crude prices climbed to their highest level since June 19, reflecting the renewed geopolitical risk. Jorge Leon, head of geopolitical analysis at Rystad Energy, noted that the oil market reacted swiftly to these developments.

Rystad Energy highlighted that the period after July 9 will be a true test of whether diplomatic solutions remain viable. The firm's analysis suggests that "both sides may adopt an even tougher position, driving a further increase in the geopolitical risk premium." This could be exacerbated by peak summer fuel consumption for road and air travel.

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The real test comes after July 9, when the mourning period ends and both sides show if a diplomatic solution is still possible.

Shipping traffic through the Strait of Hormuz, a vital chokepoint for global oil supplies, has shown a marked decrease. Rystad Energy data indicates a significant drop in the number of vessels passing through the strait, and they anticipate this trend will continue until regional security becomes clearer. Even without major disruptions, factors like increased insurance costs, potential delays, and the threat of retaliatory attacks could fuel market uncertainty.

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Both sides may adopt an even tougher position, driving a further increase in the geopolitical risk premium.