(June 11): Oil rose after a second day of US military strikes on Iran, with the Islamic Republic announcing a halt to all vessels through the Strait of Hormuz in response, putting further strain on a fragile ceasefire.
Brent crude surged more than 2% to trade above US$95 a barrel, while West Texas Intermediate (WTI) advanced towards US$93, before paring gains after the US military announced an end to the brief campaign. US President Donald Trump has accused Tehran of dragging out talks on an interim peace deal, and he warned of more strikes in an interview with Fox News if an agreement isn’t signed.
The US military earlier refuted the Iranian claim Hormuz has been completely closed, saying commercial ships are continuing to transit the waterway. State-run Press TV reported Iran had struck two vessels attempting passage in the strait, while drones had targeted the US Fifth Fleet in Bahrain.
The fresh US attacks follow strikes on Tuesday in retaliation for the downing of an American helicopter off Oman. Renewed hostilities threaten to extend the near-total closure of Hormuz, which has choked off supplies of crude, fuels and natural gas since the start of the war in late February.
“The next few days will be critical in determining whether diplomacy can reassert itself or whether the conflict moves into a more sustained escalation cycle,” said Jorge Leon, the head of geopolitical analysis at consultant Rystad Energy. “Oil price volatility is likely to remain elevated until there is clearer evidence” for the ceasefire holding, he added.
US Central Command said it conducted “additional self-defence strikes” due to Iran’s “unwarranted and continued aggression”. Trump told Fox News he had spoken with top Iranian officials on Wednesday and they had asked him to stop the bombing. However, Iranian news organisations said authorities in Tehran denied direct talks with the American president.
See also: India boosts LNG buying to meet fertiliser, power requirements
Late Wednesday, Trump claimed in a social media post that the US military had supported the passage of “more than 200 commercial ships” through Hormuz, resulting in “more than 100 million barrels of oil” making it to market. It isn’t clear what the basis of his claim is. Trump also said the US controls the strait, “not Iran”. Both countries have implemented blockades.
Oil flows remain significantly below pre-war levels, although there has been a trickle exiting the Persian Gulf under the cover of darkness, with physical markets showing some signs of ample supply. Still, the disruption to Middle East shipments has driven energy prices higher, including retail US gasoline, and raised concerns about slowing economic growth.
Separately, US government data on Wednesday showed US crude inventories fell by 7.2 million barrels last week, extending declines for a seventh week. Supplies at Cushing, Oklahoma, also dropped slightly.
See also: Oil climbs after fresh US strikes on Iran over helicopter attack
Prices:
- Brent for August settlement rose 0.8% to US$93.89 a barrel at 1.25pm in Singapore.
- Futures advanced 1.8% on Wednesday.
Uploaded by Chng Shear Lane
