Brent futures rose $2.30, or 2.47%, to $95.40 a barrel, while U.S. West Texas Intermediate (WTI) crude climbed $2.60, or 2.89%, to $92.63 following Iran's announcement of the closure of the Strait of Hormuz. This decision comes amid escalating tensions with the U.S., which launched additional strikes against Iran on Wednesday.
Iran's top joint military command announced the closure of the Strait of Hormuz on Thursday, threatening to shoot at any vessel attempting passage. This strategic waterway is crucial as it carries a fifth of the global oil and gas shipments. Despite Iran's announcement, the U.S. military stated on X that commercial ships continue to transit the strait without incident.
The U.S. military also clarified that no U.S. warships have been struck in the strait, countering reports from Iran's state media of missile and drone attacks on U.S. ships near the waterway. The U.S. forces began launching additional strikes against multiple targets in Iran at 5:15 p.m. EDT (21:15 GMT) on Wednesday.
The ongoing blockade of the strait by Iran, which has persisted for months, has contributed to elevated oil prices. Meanwhile, U.S. crude inventories fell by 7.2 million barrels to 426.5 million barrels in the week ended June 5, according to the EIA, surpassing analysts' expectations of a 4 million-barrel draw.
U.S. crude inventories, including those from strategic reserves, have decreased by 79 million barrels since the Iran conflict began on February 28, as the U.S. has stepped in to fill supply gaps caused by the effective closure of the strait.
Background
The closure of the Strait of Hormuz by Iran and the subsequent U.S. military response mark a significant escalation in tensions between the two nations. The strait is a critical chokepoint for global oil shipments, and its closure could have far-reaching implications for global energy markets.
As the situation develops, market participants will be closely monitoring the geopolitical tensions and their potential impact on oil prices. The fragile ceasefire between the U.S. and Iran, agreed upon in early April, appears to be under significant strain, raising concerns about the possibility of a full-scale conflict resuming.
