Oil rises more than US$1 as escalation in US-Iran strikes unnerve traders
Global oil consumption is roughly 100 million barrels per day
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[SINGAPORE] Oil prices jumped on Thursday (Jun 11) as Teheran declared the critical energy chokepoint, the Strait of Hormuz, closed after the US launched additional strikes against Iran and as US President Donald Trump vowed even more attacks if no peace deal is secured.
Brent futures rose US$1.48, or 1.59 per cent, to US$94.58 a barrel as of 0243 GMT, while US West Texas Intermediate (WTI) crude climbed US$1.71, or 1.90 per cent, to US$91.74. US crude futures gained more than US$3 earlier in the session.
Iran’s top joint military command announced the closure of the Strait of Hormuz on Thursday, including to oil tankers and commercial ships, saying any vessel attempting passage will be shot at.
“It once again suggests a deal is still some way off and that energy flows from the Persian Gulf will remain heavily constrained,” said ING analysts in a note to clients.
The renewed escalation in fighting prompted oil prices to rally in early morning trading, they said.
On Wednesday, the US military said on X that commercial ships continue to transit in and out of the strait.
It also said no US warships have been struck in the strait, after Iran’s state media reported US ships near the waterway were targeted by missiles and drones.
US forces began launching additional strikes against multiple targets in Iran at 5.15 pm (US Eastern time) on Wednesday (5.15 am in Singapore on Thursday), the latest in an escalating exchange of attacks that threaten to reignite a full-scale war, which was paused in early April when the two sides agreed to a fragile ceasefire.
Trump told Fox News reporter Trey Yingst on Wednesday evening that the strikes would stop shortly but that he would “bomb the shit out of them” if Iran’s leaders did not sign an agreement with the US immediately.
Iran’s months-long blockade of the strait, which normally carries a fifth of global oil and gas shipments, has kept oil prices elevated.
Meanwhile, US crude inventories fell by 7.2 million barrels to 426.5 million barrels in the week ended Jun 5, the US Energy Information Administration said on Wednesday, compared with analysts’ expectations in a Reuters poll for a 4 million-barrel draw.
US crude inventories, including those from strategic reserves, have fallen by 79 million barrels since the Iran war began on Feb 28, as the top global producer moved to plug supply gaps after the strait was effectively shut.
Underscoring the squeeze, Opec output in May slid to its lowest level in over two decades, a Reuters survey showed, as a US naval blockade curbed Iran’s exports and Teheran’s effective closure of the strategic waterway slashed shipments from other Gulf producers. REUTERS
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