Oil prices rose by more than 2% on Tuesday, partially offsetting losses from the previous session, amid supply concerns due to the almost complete closure of the Strait of Hormuz and the refusal of US allies to send warships to assist tankers in passing through this vital waterway, UNN reports, citing Reuters.
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Brent crude futures jumped $2.74, or 2.7%, to $102.95 a barrel by 03:57 GMT (05:57 Kyiv time), while US West Texas Intermediate crude rose $2.45, or 2.6%, to $95.95.
In the previous session, Brent crude futures fell 2.8%, and US West Texas Intermediate (WTI) crude dropped 5.3% after some vessels passed through the critical waterway.
The Strait of Hormuz – a narrow passage for about 20% of the world's oil and liquefied natural gas trade – has been largely blocked by the US-Israel war against Iran, now in its third week, raising fears of supply shortages, rising energy prices, and inflation.
"The risks remain severe: it would only take one Iranian militia to fire a missile or plant a mine on a passing tanker to reignite the entire situation," IG market analyst Tony Sycamore noted in his memo.
On Monday, several US allies rejected US President Donald Trump's call to send warships to escort vessels through the Strait of Hormuz, drawing criticism from the US president, who accused Western partners of ingratitude after decades of support.
"For now, oil markets are focused on the duration of the conflict, the halt of supplies in the Strait of Hormuz, and ultimately, the damage this chaos will inflict on oil infrastructure in the Persian Gulf," said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Meanwhile, traders said prices received additional support after a fire broke out in the Fujairah oil industrial zone as a result of a drone attack during early Asian trading, although no casualties were reported.
Middle Eastern oil prices soared to record highs, becoming the most expensive oil in the world, with traders attributing the price surge to a reduction in available supply.
The de facto closure of the strait forced the United Arab Emirates, the third-largest oil producer in the Organization of the Petroleum Exporting Countries, to halt production, cutting it by more than half, two sources told Reuters.
Iran demanded that India release three tankers seized in February as part of negotiations for the safe passage of Indian-flagged vessels or those heading to India from the Persian Gulf through the Strait of Hormuz, three sources familiar with the situation told Reuters.
To curb rising energy prices, the head of the International Energy Agency (IEA) proposed that member countries increase oil releases in addition to the 400 million barrels they have already agreed to use from strategic reserves.
Israel said it has detailed plans for at least three weeks of war, as its military struck targets across Iran overnight.