Brent crude oil traded at $106.80 per barrel on Friday morning, nearly 5 percent higher than its Wednesday close, as tensions between the United States and Iran escalated in the Strait of Hormuz.
US and Iran deadlock over control of the Strait of Hormuz
The United States and Iran are locked in a confrontation over the Strait of Hormuz, a waterway that normally carries about one-fifth of the world’s oil and natural gas supply. US President Donald Trump ordered the Navy to destroy any Iranian boats laying mines in the strait and declared that no ship can enter or leave without US Navy approval. Iran’s Islamic Revolutionary Guard Corps captured two foreign cargo ships, the Panamanian-flagged MSC Francesca and the Greek-owned Epaminondas, accusing them of endangering maritime security by operating without permits and tampering with navigation systems. The Greek Maritime Affairs and Insular Policy Ministry denied the capture of the Epaminondas, stating it remains under its captain’s control.
Shipping activity in the strait has sharply declined
Only nine commercial vessels transited the Strait of Hormuz on Wednesday, down from seven on Tuesday and 15 on Monday, according to maritime intelligence platform Windward. Before the US and Israel launched their military operation against Iran on February 28, the strait averaged 129 daily transits, based on United Nations Trade and Development data. The current standstill reflects Iran’s demand to control which vessels may pass and the US blockade of Iranian maritime trade. Washington has also seized a tanker carrying sanctioned Iranian oil for the second time in less than a week.
Oil prices rise amid supply concerns
Brent crude surpassed $100 per barrel for the first time in two weeks on Wednesday before climbing above $106 on Friday. The price jump follows heightened fears of supply disruption from the Strait of Hormuz, a critical chokepoint for global energy markets. US stock markets reacted negatively overnight, with the S&P 500 falling 0.41 percent and the Nasdaq Composite dropping 0.89 percent. Analysts warn that prolonged disruption could further inflate energy costs and strain already fragile global markets.
Why is the Strait of Hormuz important for global oil markets?
The Strait of Hormuz is a key maritime route through which about one-fifth of the world’s oil and natural gas supply is transported, making it a critical chokepoint for global energy security.
What actions have the US and Iran taken in the strait?
The US has ordered its Navy to destroy Iranian mine-laying vessels and required its approval for all ships entering or leaving the strait, while Iran has seized two foreign cargo ships and asserts the right to decide which vessels may pass.
