Oil prices increased by approximately 2% on Wednesday 15 July as rising hostilities between the US and Iran heightened concerns about disruptions to global energy supplies.
Brent crude was trading at $86.44 per barrel (bbl) at 08:06 GMT, up by $1.71 or 2%. West Texas Intermediate (WTI) futures rose by $1.43, or 1.8%, to $80.77/bbl, reported Reuters.
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The gains followed Tuesday’s session, when oil prices settled at a one-month high.
The heightened volatility comes after US President Donald Trump announced the reimposition of a naval blockade on all Iranian ports, escalating measures targeting Iran’s oil exports.
In response, Iran’s Islamic Revolutionary Guard Corps (IRGC) stated it may close “all other export corridors that benefit the US and its allies”.
In a statement published by Iran’s state-owned Islamic Republic News Agency, the IRGC said: “Regional energy exports are either shared by all, or denied to all.”
The Strait of Hormuz, a key maritime passage for nearly a fifth of the world’s oil and liquefied natural gas, has experienced increased risk of disruption following direct attacks and threats linked to the ongoing conflict.
According to Reuters, analysts said Iran has been signalling it may use its Houthi allies in Yemen to shut the Bab el-Mandeb gateway to the Red Sea. Analysts said such a move could broaden the conflict with Washington and threaten two of the world’s most important energy routes.
Tensions have escalated since the collapse of a fragile truce in June, leading to renewed fighting between Iran and the US.
Early on Wednesday, the US military confirmed a new round of air strikes intended to degrade Iranian capabilities targeting commercial shipping in the Strait of Hormuz.
During an interview aired on Fox News on Tuesday night, President Trump said: “I will save the energy targets for last, but ultimately we will hit energy targets.”
Meanwhile, Goldman Sachs said Gulf exports rebounded to more than 80% of pre-war levels after a US-Iran memorandum of understanding in June, but had fallen back to below 50%, or around 11 million barrels per day, over the past week.
The bank suggested Brent prices could surpass $110/bbl in the fourth quarter if the recovery of Gulf exports remains stalled.
Brent crude futures for prompt delivery were traded at a $8.92/bbl premium to contracts six months forward, the largest margin since 10 June, Reuters reported. This market condition, known as backwardation, is generally viewed as an indicator of tight near-term supply in the oil sector.
