Oil prices experienced a 2% increase on Tuesday, reaching their highest level in four weeks. This rise is attributed to the United States reinstating its naval blockade of Iran, coinciding with an escalation in hostilities between the two nations in the Strait of Hormuz, which has created uncertainty surrounding energy supply routes.
By 0051 GMT, Brent crude futures had risen by $1.68, or 2%, to $84.98 per barrel, while U.S. West Texas Intermediate crude saw an increase of $1.65, or 2.1%, bringing it to $79.79 a barrel. Notably, Brent crude had surged 9.6% in the previous trading session, marking its most significant daily increase since May 2020.
Currently, oil prices are at their highest point since the signing of a memorandum of understanding aimed at ending hostilities on June 17.
On Monday, the UAE Ministry of Defence reported that two tankers from the United Arab Emirates were struck by Iranian cruise missiles in the southern lane of the Strait of Hormuz, within Omani territorial waters. This incident resulted in the death of one Indian crew member and injuries to eight others.
U.S. President Donald Trump informed the press that the blockade on Iranian shipping had been reinstated, emphasizing that he expects the U.S. to be compensated for its protective efforts in the Strait of Hormuz.
Tim Waterer, chief market analyst at KCM Trade, commented, “The recent escalation, highlighted by the U.S. reimplementation of the blockade and the Iranian retaliatory actions, has certainly introduced new risks into the market.” He further noted, “While a complete closure of the Strait has not yet occurred, the conflicting goals of both parties have rendered the supply situation highly unpredictable.”
Meanwhile, U.S. Central Command announced that it had initiated a third consecutive night of airstrikes targeting Iranian positions. In response, the semi-official YJC news agency in Tehran reported the occurrence of seven explosions in the port city of Bandar Abbas, with two additional blasts reported on Kish Island.
In another development, Yemen’s Houthi movement launched missiles toward Saudi Arabia, accusing the kingdom of conducting airstrikes on an airport under its control the previous day.
Simon Wong, a portfolio manager at Gabelli Funds, warned in a recent note, “Should the Houthis expand their attacks to include Saudi Arabia’s crude facilities in the Red Sea, it could further complicate the flow of crude from the region.”
Source: Financial Chronicle Biz English | Sri Lanka Business News.
