Oil Prices Climb as US-Iran Escalation Raises Fears Over Strait of Hormuz

Other news outlets

Oil prices.

Oil prices extended their gains on Thursday after the United States launched a fresh round of strikes against Iran, prompting Tehran to announce a complete suspension of shipping through the Strait of Hormuz.

Brent crude futures for August delivery rose 0.8% to $93.88 per barrel, while US West Texas Intermediate (WTI) crude climbed 1% to $90.92 per barrel.

Both benchmarks had surged by more than 2% during early Asian trading before trimming some of their advances.

US President Donald Trump warned on Wednesday that Washington would respond "very strongly" if negotiations with Iran failed. Hours later, US forces carried out a new series of strikes against Iranian targets.

Iran subsequently announced retaliatory attacks against US military facilities at bases in Kuwait and Bahrain.

Following the exchange of attacks, Iranian military authorities declared the Strait of Hormuz closed to all maritime traffic, including oil tankers and commercial vessels, warning that any vessel attempting to transit the waterway could be targeted. The latest US operation came a day after Washington launched strikes against Iranian targets in response to the reported downing of a US military Apache helicopter near the Strait of Hormuz.

The strait remains one of the world's most strategically important energy routes, carrying a substantial share of global seaborne crude oil exports.

“This once again indicates that a settlement remains some way off and that energy supplies from the Gulf are likely to remain under significant pressure,” analysts at ING said in a research note.

Meanwhile, Trump disclosed that the US military had been quietly escorting oil shipments through the Strait of Hormuz, claiming that more than 100 million barrels had passed through the waterway under American protection.

Supporting oil prices further, figures released by the US Energy Information Administration on Wednesday showed that crude inventories fell by 7.2 million barrels in the week ending 5 June, well above analysts’ expectations for a decline of around 3 million barrels.

Petrol inventories increased by 0.2 million barrels over the same period, while distillate stocks, including diesel and heating oil, declined by 0.2 million barrels.

Investors are also closely watching inflationary pressures linked to higher energy costs. US consumer price inflation accelerated to 4.2% in May, reinforcing expectations that central banks may keep interest rates elevated for longer.

Markets are now awaiting US producer price data and weekly jobless claims figures due later on Thursday, which could provide further indications about the outlook for inflation and the likely direction of Federal Reserve policy.


PUKMEDIA