Oil Rises More Than 2% After Iran Declares Closure of Strait of Hormuz
Summary
- International oil prices extended gains after Iran declared a closure of the Strait of Hormuz and news emerged of additional U.S. airstrikes on Iran.
- Brent crude futures and WTI rose 2.47%% and 2.89%%, respectively, to $95.40 a barrel and $92.63 a barrel.
- Markets are concerned that an escalation in the U.S.-Iran military conflict could disrupt Middle East oil supplies, while a 7.2 million-barrel drop in U.S. crude inventories is adding to supply pressure.
Forecast Trend Report by Period
Oil prices extended gains after Iran declared the closure of the Strait of Hormuz and news emerged of additional U.S. airstrikes on Iran.
Reuters reported on June 10 that Brent crude futures rose 2.47% to $95.40 a barrel. West Texas Intermediate crude gained 2.89% to $92.63 a barrel. Both benchmarks jumped more than $3 at one point during the session.
The advance was triggered by Iran's formal declaration that it would shut the Strait of Hormuz. In a statement issued the same day, Iran's joint military command said it was closing the waterway and banning the passage of all vessels, including oil tankers and merchant ships. Any vessel attempting to pass through would be subject to attack.
The U.S., however, disputed the claim. The military said commercial vessels were still passing through the Strait of Hormuz and that no American warship had been attacked.
The announcement came shortly after another round of U.S. strikes. U.S. Central Command said the previous day that, on the president's orders, it had carried out additional airstrikes targeting military surveillance facilities, communications networks and air defense sites inside Iran.
Markets are concerned that an escalation in the U.S.-Iran military conflict could prolong disruptions to Middle East oil supplies. The Strait of Hormuz is a critical shipping route that handles about 20% of global oil and natural gas shipments.
Separately, the U.S. Energy Information Administration said U.S. crude inventories fell by 7.2 million barrels last week to 426.5 million barrels. That far exceeded market expectations for a 4 million-barrel decline. The U.S. has increased crude production since the Middle East conflict began in February to help offset supply gaps, but inventories have continued to shrink.
