Oil prices rose sharply on Thursday (local time) as tensions escalated in the Middle East, with the United States launching more strikes on Iran, raising concerns about the flow of energy supplies through the Strait of Hormuz.
Brent crude, the global benchmark, rose 7.8% to $109.03 per barrel after surpassing $111 per barrel. Meanwhile, West Texas Intermediate crude futures for near-term delivery next month recorded the largest premium ever over second-month contracts, rising to $111.54, up 11.41%. Earlier in the session, US crude jumped beyond $113 a barrel. Meanwhile, the spot price of Brent crude for immediate physical delivery rose higher, reaching $141.36, reaching the highest level since the 2008 financial crisis, according to S&P Global data, cited by CNBC.
The spot rate reflects demand for shipments scheduled to be delivered within the next 10 to 30 days.The recent rise builds on the previous rise in oil markets, which saw prices fluctuate sharply during the previous session. Prices initially fell as traders reacted to uncertainty ahead of Donald Trump’s national speech, but rebounded after his comments did little to allay concerns about the Strait of Hormuz. Earlier in the day, Brent crude fell $1.16 to $100 a barrel, while US West Texas Intermediate crude fell $1.41 to $98.71.
Sentiment later changed, with Brent crude rising more than 4% to $106, and WTI rising 3% to $103 after the speech.This comes as Iran continues to strangle the Strait of Hormuz, disrupting shipping flows through the strategically important corridor that normally handles about a fifth of global oil trade during peacetime.The ongoing US-Israeli war against Iran, now approaching the end of its fifth week, has removed millions of barrels per day from global supplies, pushing energy prices to multi-year highs and causing fuel shortages in countries that rely on oil and gas shipments through the now-closed Strait of Hormuz.About 20% of the world’s oil flows through this strategic strait. In a speech on Wednesday evening, Trump pledged to hit Iran “very hard” in the coming weeks, but did not outline a plan to reopen the strait, suggesting instead that other countries would take responsibility for restoring shipping access.
