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Oil rises above $106 per barrel as US, Iran deadlocked in Strait of Hormuz
TL;DR
Oil prices have surged above $106 per barrel amid escalating tensions between the US and Iran in the Strait of Hormuz. The confrontation has led to a standstill in shipping through this critical maritime route.
Key points
- Oil prices topped $106 per barrel due to US-Iran tensions
- Brent crude rose nearly 5 percent from previous closing price
- Strait of Hormuz carries about one-fifth of global oil supply
- US stocks fell amid rising oil prices
- Shipping in the Strait remains at a standstill
Mentioned in this story
United StatesIran
Strait of HormuzBrent crude
Oil prices have jumped on heightened tensions between the United States and Iran in the Strait of Hormuz following Washington and Tehran’s tit-for-tat captures of commercial vessels.
Brent crude, the international benchmark, topped $106 per barrel early on Friday morning as Washington and Tehran stepped up their confrontation over the key maritime route for transporting the world’s energy.
Brent stood at $106.80 as of 01:00 GMT, up nearly 5 percent from its closing price on Wednesday, when it surpassed $100 per barrel for the first time in two weeks.
US stocks fell overnight, with the benchmark S&P 500 index dipping 0.41 percent and the tech-heavy Nasdaq Composite dropping 0.89 percent.
Shipping in the Strait of Hormuz, which normally carries about one-fifth of the world’s supply of oil and natural gas, remains at a standstill as Iran continues to demand the right to decide which vessels may pass and the US blocks Iran’s maritime trade.
US President Donald Trump said in a Truth Social post on Thursday that he had ordered the US Navy to destroy any Iranian boats laying mines in the strait, shortly after the Pentagon announced that it had seized a tanker carrying sanctioned Iranian oil for the second time in less than a week.
Trump also appeared to expand the scope of the US naval blockade beyond Iranian ports, writing on Truth Social that no ship “can enter or leave” the strait without the approval of the US Navy.
“It is ‘Sealed up Tight,’ until such time as Iran is able to make a DEAL!!!” Trump said.
Trump’s threats came a day after Iran’s Islamic Revolutionary Guard Corps announced the capture of two foreign cargo ships in the waterway.
The IRGC said it had seized the Panamanian-flagged MSC Francesca and Greek-owned Epaminondas after the vessels had endangered maritime security “by operating without the necessary permits and tampering with navigation systems”.
The Greek Maritime Affairs and Insular Policy Ministry has denied that the Epaminondas was captured and said the vessel remains under the control of its captain.
Only nine commercial vessels transited the strait on Wednesday, compared with seven on Tuesday and 15 on Monday, according to maritime intelligence platform Windward.
Before the US and Israel launched their war against Iran on February 28, the waterway saw an average of 129 transits each day, according to United Nations Trade and Development.
Q&A
What caused the recent rise in oil prices above $106 per barrel?
The rise in oil prices is attributed to increased tensions between the US and Iran, particularly their recent captures of commercial vessels in the Strait of Hormuz.
How does the Strait of Hormuz impact global oil supply?
The Strait of Hormuz is crucial as it carries about one-fifth of the world's oil and natural gas supply, making any disruptions significantly impactful on global energy markets.
What are the implications of US and Iran's conflict for shipping in the Strait of Hormuz?
The conflict has resulted in a standstill of shipping in the Strait of Hormuz, with Iran asserting control over vessel passage and the US blocking Iran's maritime trade.
