Key facts
- Oil prices rose significantly after the US revoked a general license for Iranian oil sales.
- Attacks on vessels near the Strait of Hormuz revived fears of shipping disruptions.
- Brent crude futures settled up 3.01% at $74.16 a barrel, and WTI crude rose 2.76% to $70.44.
- In post-settlement trade, Brent climbed to $75.12 and WTI to $71.49, both up over 4% from previous settlements.
- A Qatari LNG carrier was reportedly struck by an Iranian drone in the Strait of Hormuz.
- Ukrainian drones targeted Russian 'shadow fleet' tankers delivering fuel to Crimea.
Oil prices experienced a significant surge, settling 3% higher and extending gains in post-settlement trading, following the U.S. decision to revoke a general license that had permitted the sale of Iranian crude oil. This move, coupled with reports of attacks on vessels near the critical Strait of Hormuz, reignited concerns about potential disruptions to global oil tanker shipping.
Brent crude futures concluded the session up $2.17, or 3.01%, at $74.16 per barrel. Simultaneously, U.S. West Texas Intermediate (WTI) crude futures rose $1.89, or 2.76%, to $70.44 a barrel. In the trading session after the official settlement, the global Brent benchmark climbed an additional 96 cents to $75.12, and WTI advanced $1.05 to $71.49, marking gains of over 4% from their previous settlement prices.
The U.S. government issued a warning, stating that Iran's actions in the Strait of Hormuz were "wholly unacceptable" and would face repercussions. This statement came in the wake of multiple incidents involving tankers in the strategic waterway. Reports indicated that three tankers were struck on Tuesday, including a Qatari liquefied natural gas carrier that Qatar confirmed was hit by an Iranian drone. Additionally, a Saudi-flagged crude oil tanker, identified as the supertanker Wedyan, sustained damage off the coast of Oman, though the cause remained unclear.
Analysts noted the heightened volatility. Ajay Parmar, director of energy and refining at ICIS, commented that the situation highlights the fragility of the current ceasefire and that further sporadic attacks could occur, adding to market volatility. He suggested that any threat from Iran to close the Strait of Hormuz could cause prices to spike considerably, predicting that volatility is likely to persist.
Giovanni Staunovo, an analyst at UBS, indicated that renewed tensions in the Middle East and concerns over vessel attacks could lead to a reduction in oil exports from the region. Meanwhile, Iran's foreign minister stated that talks with Washington would not proceed if U.S. threats continued, following a statement from U.S. President Donald Trump regarding a potential deal.
Investors are closely watching the ongoing negotiations between the U.S. and Iran, particularly their potential impact on shipping through the Strait of Hormuz. This vital waterway previously handled approximately one-fifth of the world's daily oil and LNG supply before the start of the Iran war.
In a separate development on Tuesday, Ukraine's military reported that its drones had targeted eight aging tankers belonging to Russia's "shadow fleet" that were being used to circumvent sanctions and deliver fuel to Crimea.