Oil and gas prices rise despite attempts to calm markets
According to TV2, US President Donald Trump's attempts to contain the rapid rise in energy prices have failed, at a time when global markets are beginning to reflect growing concern over the disruption of shipping traffic in the Strait of Hormuz, which could lead to higher gasoline and diesel prices paid by consumers in Denmark.
The website stated that Trump had made a number of proposals in recent days aimed at reducing energy prices after the recent surge, but energy experts in Denmark warned on Wednesday morning that consumers, especially motorists, should not expect a rapid drop in fuel prices.
New surge in oil and gas prices
Market movements showed that the price of oil rose again from $80 to $84 a barrel, confirming that the drop in prices on Tuesday was only a temporary decline that quickly dissipated.
Gas prices also rose by an additional five percent, bringing the total increase to about 80 percent since the crisis began on February 28.
Saxo Bank commodities analyst Ole Sloth Hansen said markets see no real chance of Trump’s price-cutting initiative succeeding, adding: “This shows that Trump’s attempt to cut energy prices has no real chance of success.”.
Closing the Strait of Hormuz deepens the global energy crisis
On Tuesday, Trump tried to calm market fears when he offered that the United States could provide security for commercial vessels that dared to cross the Strait of Hormuz to transport oil and liquefied natural gas.
But the effect of this move did not last long, as prices began to rise again on Wednesday morning.
Ole Sloth Hansen explained that the current situation represents one of the most dangerous scenarios feared by energy markets, saying: “We are now facing a situation in which one of the world’s largest oil and gas producing regions is practically being locked down.”.
The repercussions will be seen at petrol stations in Denmark.
Arne Lohmann Rasmussen, chief analyst at Global Risk Management, warned that the crisis could quickly spread to other economic sectors, although the first impact will be seen in energy prices.
He stressed that the price increase would directly affect gasoline and diesel prices in Denmark.
He said: “This will show at the petrol stations here in Denmark. The markets are approaching a state of panic. Apart from Iranian ships, no one dares to cross the strait, and no responsible Western company will risk exposing its crew to being killed.”.
Ship escort plans do not allay companies' concerns
Arne Lohmann Rasmussen pointed out that the US plan to escort commercial ships through the Strait of Hormuz in maritime convoys will not change much in the risk assessment of shipping companies.
He said: “These ships will become targets for Iranian missiles. The market concludes that as long as Iran possesses missiles, the passage of oil tankers through the Strait will remain extremely dangerous.”.
He added that when examining ship tracking websites at the request of TV2, only one oil tanker appeared in the strait, an Iranian tanker that was on its way to the major Iranian export port on Kharg Island.
Stock markets declined as concerns mounted.
The repercussions were not limited to energy markets, as the concerns were also reflected in global financial markets.
In Japan, stocks fell 3.4 percent overnight, following sharp declines of more than 3 percent in European markets on Tuesday.
Although some European indices recorded a slight increase on Wednesday morning, this increase was not enough to offset the large losses recorded the previous day.
Concerns about the impact of the crisis on agriculture
Saxo Bank commodities analyst Ole Sloth Hansen indicated that the crisis could later extend to the agricultural sector as well.
He explained that the region is one of the world's largest producers of agricultural fertilizers, but noted that the impact on this sector would require the Strait of Hormuz to remain closed for a longer period before it would become clearly visible.
International efforts to ease pressure on markets
In contrast, some initiatives have emerged that may contribute to reducing price increases.
Saudi Arabia has begun working to increase its reliance on an overland pipeline to transport gas to its ports on the west coast instead of the eastern ports overlooking the Strait of Hormuz.
The Europeans are also considering the possibility of using part of the strategic oil and gas reserves that countries have built up over the past years, with the aim of pumping additional quantities into the markets and easing price pressures.
Warnings of a global economic crisis
When asked whether energy prices had peaked, Arne Lohmann Rasmussen ruled that out for the time being.
He said: “That won’t happen if the lockdown continues for weeks. And if this situation continues for a long time, it could lead to a global economic crisis.”.
