Crude oil prices rise due to risks to shipping in the Strait of Hormuz

Crude oil prices jumped more than 2% on July 8 after the United States launched airstrikes on Iran and reimposed sanctions on Iranian crude.

That raised concerns that a fragile truce between the two sides could unravel and risk further disruptions to Middle Eastern energy supplies, Reuters reported.

Brent crude futures rose $1.92, or 2.6%, to $76.08 a barrel by 0400 GMT. U.S. West Texas Intermediate crude rose $1.82, or 2.6%, to $72.26 a barrel.

“While the license revocation does not fundamentally change the dynamics of the crude oil market, it is significant from a sentiment perspective. It increases the risk of a breakdown in the interim agreement between the US and Iran,” ING commodity strategists said.

The US Central Command said the US airstrikes were in response to Iranian attacks on three commercial vessels passing through the Strait of Hormuz.

“The current tensions are a reminder to the market of how volatile the Strait of Hormuz remains,” said Sol Kavonik, head of research at MST Marquee.

He added that if traffic through the waterway remains below 50% of pre-war levels, the resulting supply constraints could help push up crude oil prices.

Iran has not claimed responsibility for the attacks on the vessels. Meanwhile, Qatar has blamed Tehran, in particular, for an attack on a Qatari liquefied natural gas tanker, which was reportedly hit by a drone, causing a fire in the engine room.

A Saudi-flagged crude oil tanker was also damaged off the coast of Oman, according to maritime security sources.

Tags: prices