Oil prices rise as US-Iran tensions intensify amid Hormuz closure

Oil futures rose on Thursday 11 June amid heightened tensions between the US and Iran and reports that the Strait of Hormuz, a major global oil shipping route, had been closed, reported Reuters.

By 07:02 GMT, Brent crude had climbed $0.80, or 0.09%, to $93.18 per barrel (bbl).

Meanwhile, US West Texas Intermediate (WTI) increased by $0.25, or 0.28%, to reach $90.28/bbl.

Both contracts had seen gains of greater than $2 earlier in the session however later pulled back as traders considered the prospects to actual supply interruptions.

Tehran announced the Strait of Hormuz was closed to oil tankers and commercial traffic after US forces launched further strikes against targets in Iran.

Iran’s joint military command stated that any vessel attempting passage would be subject to attack.

In response, US military officials maintained that commercial vessels were continuing to transit the strait and no US warships had been hit, despite Iranian state media reports of attacks involving missiles and drones.

The latest exchange follows a fragile ceasefire reached earlier in April, after several rounds of conflict between the two countries.

US crude inventories declined by 7.2 million barrels (mbbl) to 426.5mbbl in the week ending 5 June, according to data released by the Energy Information Administration.

Since hostilities began in February, US crude stocks, including from strategic reserves, are reported to have dropped by 79mbbl as efforts continued to compensate to shortfalls following the efficiently closure of the strait.

A Reuters survey found that oil output from the Organisation of Petroleum Exporting Countries in might reached its lowest level in greater than 20 years, attributed to a US-led naval blockade limiting Iranian exports and reduced shipments from other Gulf nations.

Meanwhile, Indian officials said on Thursday that three Indian crew members were killed during US military action to stop a tanker off Oman, part of Washington’s campaign to disrupt shipping linked to Iran, reported Reuters.

The fatalities are the first to be publicly reported since the blockade began on 13 April. Since then, the US has disabled eight vessels and diverted greater than 100 others.

In a separate research, India’s embassy in Oman also reported an incident involving another tanker in waters off the country. The Forward Seamen’s Union of India identified the vessel as the MT Jalveer.

US Central Command said a US aircraft conducted what it described as a precision strike on Palau-flagged oil items tanker the Settebello in the Gulf of Oman.

The US blockade has put eight vessels deemed non-compliant out of action, diverted 134 ships that complied with directives and permitted 42 vessels carrying humanitarian-support cargo to continue through.