Oil prices have eased sharply on hopes that the US and Iran will agree to reopen the Strait of Hormuz, but analysts say Asian economies are unlikely to quickly shake off the effects of the energy shock even if the key waterway returns to normal.
Benchmark Brent crude oil fell 11.15 per cent to US$92.13 per barrel on Friday, from its level a week earlier, its steepest weekly drop since early April.
Prices edged up again on Monday, trading at about US$93 per barrel during Asian afternoon trading hours amid concerns over bank rate rises, though still far below the US$119.50 per barrel reached on March 9.
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The Strait of Hormuz is a critical chokepoint for Gulf energy exports to Asia and reopening it would offer immediate market relief after months of disruption to maritime traffic.
But analysts said the recovery would probably be slower and more uneven than the fall in oil prices suggested, with ship backlogs, depleted inventories and damaged facilities likely to weigh on Asia’s energy importers.
Over the weekend, an Iranian ballistic missile strike on a Kuwaiti airbase caused minor injuries to several Americans, while Israel stepped up its offensive against the Tehran-backed Hezbollah in Lebanon.