SunSirs: Crude Oil: Signs of Escalation in Iran Drive Up Oil Prices

According to Sina Finance, crude oil prices rose on Thursday as signs of a new escalation in the conflict with Iran cast a shadow over the prospects of the Strait of Hormuz reopening to shipping in the near future.

WTI crude futures on the New York market rose 3.1% to close near $96 per barrel, having risen as much as 5.8% during the session. Brent crude futures closed above $105 per barrel.

Oil prices fluctuated for most of the day but surged sharply in late trading; the deadlock in peace talks, heated rhetoric from both sides and heightened military threats have all injected a higher geopolitical risk premium into the market.

Iranian media reported that air defense systems had been activated in parts of Tehran to counter “hostile targets”, though no further details were provided regarding the nature of these targets. Investors have remained anxious about the prospect of renewed attacks on the region’s energy infrastructure, following Israel’s statement on Thursday that it was prepared to resume strikes against Iran.

With both the US and Iran blocking the Strait of Hormuz, shipowners are also seeing increasing evidence that transiting this vital waterway is unsafe.

Earlier on Thursday, US President Trump posted on social media that he had ordered the US Navy to “shoot down” any vessels laying mines in the Strait of Hormuz. Oil prices rose on the back of this news.

Mona Yacoubian, Director of the Middle East Programme at the Centre for Strategic and International Studies, said: “The ceasefire may be unravelling. “Ships are being boarded, Iran is openly defying the US, and the US is extending its operations far beyond the waters of the Middle East. The escalation of maritime activity is very real.”

For those considering transiting the Strait of Hormuz, the extent of the minefields and the time required to clear any potential mines remain unresolved issues.

Giovanni Staunovo, an analyst at UBS in Zurich, said: “As long as passage through the Strait of Hormuz remains restricted, the market will continue to tighten, oil inventories will continue to fall, and oil prices will remain supported.”

At the close of trading,

June WTI crude settled up 3.1% at $95.85 per barrel;

the June Brent crude settlement rose 3.1% to $105.07 per barrel.