Oil prices rose 2 per cent on Tuesday (Jul 14) to their highest in four weeks, as the US reimposed its naval blockade of Iran while the two countries stepped up attacks in the Strait of Hormuz, heightening uncertainty about energy flows.
Brent crude futures climbed US$1.68, or 2 per cent, to US$84.98 per barrel by 12.51am GMT (8.51am, Singapore time), while US West Texas Intermediate crude rose US$1.65, or 2.1 per cent, to US$79.79 a barrel.
Brent crude surged 9.6 per cent in the previous session, its biggest daily gain since May 2020.
Oil prices are now at their highest since the two countries signed a memorandum of understanding to end the war on Jun 17.
Two United Arab Emirates tankers were hit by two Iranian cruise missiles in the southern lane of the Strait of Hormuz in Omani territorial waters, the UAE Ministry of Defence said on Monday, killing one Indian crew member and wounding eight others.
Meanwhile, US President Donald Trump told reporters that the United States had reinstated its blockade of Iranian shipping, adding that he wanted the US to be reimbursed for protecting countries that it was helping in the Strait of Hormuz.
“The latest escalation, including the US reinstatement of the blockade and Iranian responses, has clearly injected fresh risk into the market,” KCM Trade chief market analyst Tim Waterer said.
“While a full closure hasn’t occurred, the competing objectives of both sides have made the supply picture highly uncertain,” he added.
US Central Command said it began a third consecutive night of strikes against Iran, while Tehran’s semi-official YJC news agency said early on Tuesday that seven explosions were heard in the port city of Bandar Abbas and two more on Kish Island.
Elsewhere, Yemen’s Houthi movement fired missiles at Saudi Arabia after accusing the kingdom of bombing an airport under its control on Monday.
“If the Houthis extend their attacks to Saudi’s crude products in the Red Sea, it could put (further) uncertainties on crude flows from the region,” Simon Wong, a portfolio manager at Gabelli Funds, said in a note.
Meanwhile, US crude oil stockpiles were expected to have fallen last week, while gasoline and distillate stocks likely rose, a preliminary Reuters poll showed on Monday.