Oil prices climbed more than US$1 on Thursday after Iran declared the Strait of Hormuz closed and tensions escalated following additional United States strikes on Iranian targets, according to ING analysts who said the situation suggested a deal remained some way off and energy flows from the Persian Gulf would remain constrained.
Brent futures rose US$1.48 or 1.59% to US$94.58 a barrel while West Texas Intermediate crude gained US$1.71 or 1.90% to US$91.74 as traders reacted to heightened geopolitical risk across the Middle East. The move extended earlier gains of more than US$3 during intraday trading.
Iran’s military command announced the closure of the Strait of Hormuz, a critical waterway that typically carries about a fifth of global oil and gas shipments, warning that vessels attempting passage could be targeted. The development came after the United States launched additional strikes on Iran, escalating a fragile standoff that had been temporarily eased by a ceasefire earlier in the year.
Market sentiment was further shaped by United States inventory data showing a sharper-than-expected draw. The Energy Information Administration reported a 7.2 million barrel decline in crude stocks to 426.5 million barrels for the week ended June 5, compared with expectations of a 4 million barrel drop in a Reuters poll.
The escalation has added to supply concerns already heightened by constrained flows from key producers. Oil output from OPEC fell to its lowest level in over two decades in May, while disruptions linked to the conflict have reduced shipments from Gulf exporters.
Analysts noted that the combination of geopolitical tensions, tighter inventories and restricted supply routes has reinforced upward pressure on crude prices, with traders closely monitoring developments around the Strait of Hormuz for further direction.
Reuters
