Global oil prices surged sharply on Monday after the United States seized an Iranian cargo ship, raising fears of escalation and clouding prospects of a peace deal between Washington and Tehran.
Brent crude rose 6.3 per cent to $96 a barrel, while US benchmark WTI climbed 7 per cent to $88.3 a barrel, according to reports of live market data.
The rally followed a weekend escalation in the Gulf of Oman, where US naval forces fired on and captured an Iranian-flagged vessel that allegedly attempted to breach a blockade.
Oil prices “jumped by 5 per cent overnight into Monday amid the escalating tensions,” reflecting market concerns over supply disruptions, according to sources.
The seizure has also cast doubt on planned US-Iran talks, adding further volatility to energy markets already rattled by uncertainty over the Strait of Hormuz, according to sources.
The key waterway has seen a sharp drop in traffic. Shipping activity has slowed significantly, with vessels turning back or avoiding the route altogether, sources reported.
At least 13 vessels turned around after warnings on Saturday, while no tankers were recorded transiting the Strait on Sunday, according to maritime data cited by sources.
Iran has alternated between reopening and restricting access to the Strait, contributing to a “wild ride” in oil prices in recent days, media reported.
Energy Secretary Chris Wright said it is not safe to pass through the Strait at present but added: “We can open it one way or the other. But the best way to do it is to have an end to the conflict and a defanged and de-armed Iran,” according to The Washington Post.
Analysts warn that continued disruption in the Strait of Hormuz could tighten global supply and keep prices elevated. Oil prices have already risen sharply since the conflict intensified in late February, according to the media.
