Oil prices rose following Iran's announcement that it would close the Strait of Hormuz
Global oil prices have surged amid renewed tensions between the U.S. and Iran. The market reacted to Tehran’s announcement of the closure of the Strait of Hormuz, as well as reports of new U.S. strikes on Iranian targets.
On Thursday, June 11, Brent crude futures rose by $1.48 (1.59%) to $94.58 per barrel.
At the same time, U.S. WTI crude rose by $1.71 (1.90%) to $91.74 per barrel. During the trading session, WTI prices rose by more than three dollars.
According to Iran’s Supreme Joint Military Command, the Strait of Hormuz is being closed to oil tankers and merchant ships. A statement was also issued warning that any vessels attempting to pass through the strait could come under fire.
ING analysts noted:
“This once again demonstrates that an agreement is still a long way off and that energy supplies from the Persian Gulf will continue to be significantly limited.”
In their view, the latest escalation of the conflict has been one of the key factors driving up oil prices.
The U.S. military reported that merchant ships continue to transit the Strait of Hormuz in both directions. The U.S. also stated that no American warship had been hit in the strait area, despite reports in Iranian media of missile and drone attacks.
Meanwhile, the United States launched new strikes on targets within Iran, marking another escalation between the two countries.
“We will ‘bomb them to smithereens’ if the Iranian leadership does not immediately sign an agreement with the U.S.,” U.S. President Donald Trump said.
At the same time, he expressed hope that the strikes could cease in the near future.
About 20% of the world’s oil and gas supplies pass through the Strait of Hormuz, so any restrictions on shipping in this region instantly affect global energy markets.
Analysts note that a prolonged blockade of the strait could keep oil prices high and put additional pressure on the global economy.
A further factor supporting prices was the decline in U.S. oil inventories. According to the Energy Information Administration (EIA), for the week ending June 5, inventories fell by 7.2 million barrels to 426.5 million barrels.
This figure was significantly higher than analysts’ forecasts, which had anticipated a decline of approximately 4 million barrels.
In addition, a Reuters survey showed that OPEC production in May fell to its lowest level in more than two decades, which also heightens concerns about the stability of global energy supplies.
Global oil prices rose on June 10, partially offsetting losses from the previous trading session, when prices fell to their lowest level in seven weeks. The main factors driving the price increase were new U.S. military strikes on Iran and a significant reduction in U.S. oil inventories.
Global oil prices surged during Monday’s trading due to the resumption of hostilities in the Middle East.
Prior to this, oil prices had fallen amid a ceasefire between Lebanon and Israel — Reuters.
