Crude prices rose for a third consecutive Monday as escalating tensions in Iran threatened to disrupt global energy markets.
Brent crude (BZ=F) futures rose 2.5% to $101.36 a barrel, after hitting $106.80 earlier in the session, while West Texas Intermediate (CL=F) climbed 1% to $100.70 at the time of writing.
Read more: Stocks up as Trump pressures Nato to secure Strait of Hormuz
The latest surge follows a US strike on Iran’s key Kharg Island oil hub over the weekend, a facility through which roughly 90% of the country’s oil exports typically flow.
The attack has raised fears of wider disruption to the Strait of Hormuz, a critical artery for global oil (BZ=F, CL=F) shipments. Donald Trump has called on other countries to deploy naval forces to secure the strait, warning that “it will be very bad for the future of NATO” if they do not.
Iran’s foreign minister, however, has denied that the strait is closed, asserting that it remains open to all nations except the United States, Israel, and their allies.
Read more: Top oil and energy stocks to watch as crude swings wildly amid Iran war
The conflicting statements have tempered some market jitters. Tony Sycamore, market analyst at IG, said: “This context is crucial: China and India alone account for approximately 50% of all oil (BZ=F, CL=F) that normally transits the Strait of Hormuz.”
“Additionally, Saudi Arabia’s East-West pipeline is rerouting 7 million barrels per day, bypassing Hormuz entirely, with reports indicating tankers are lined up ready to collect this redirected cargo.”
However, figures show that the number of ships transiting through the Strait of Hormuz has fallen to zero for the first time since the war began.
Jim Reid, an analyst at Deutsche Bank, said: “For now, Trump said in a post that he’d chosen not to destroy the oil infrastructure, but he also said he’d reconsider that if Iran interfered with ships’ passage through the Strait of Hormuz.
“So markets are still concerned about further escalation, and with each passing day investors have moved to price in a more protracted conflict.”
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