Oil prices shot up Wednesday as tensions flared between United States and Iran, raising fears about the Strait of Hormuz's stability. Brent crude climbed over 3%,hitting $76.48 a barrel,the highest since June 23.
This jump follows US military strikes on Iranian targets,after three commercial vessels were attacked in Strait. US Central Command announced on social media platform X that the strikes were to impose costs on Iran for its actions against civilian shipping in international waters.
US,Qatar, and Saudi Arabia officials blame Iran for the vessel attacks. Iranian Deputy Foreign Minister Kazem Gharibabadi slammed US's decision to revoke temporary waiver on Iranian oil sanctions, calling it a "blatant violation" of a June 17 memorandum.
Market analysts are watching closely. The US military actions and the sanctions waiver cancellation have stirred uncertainty in global energy markets. Tony Sycamore, a market analyst at IG Australia, noted the memorandum's language was vague about controlling the Strait of Hormuz,a long-time US-Iran flashpoint.
Sycamore said, "It remains to be seen whether this morning’s US strikes bring swift end to the latest escalation or if Iran continues to assert its influence over Strait with actions that stop short of igniting broader conflict." oil market's current volatility shows its anxiety.
The US Treasury had allowed Iranian oil sales until August 21, but that waiver is now revoked,effective 12:01 AM EDT July 17. This move blocks new transactions involving Iranian oil,squeezing Iran's exports further.
Saul Kavonic,head of energy research at MST Financial, expects oil prices to stay high due to dangerous conditions in Strait. He warned that Iran aims to solidify its control over the strait soon, a move likely to face US and Gulf allies' resistance.
Kavonic said,"Iran fully intends to cement its control over the Strait of Hormuz in coming weeks, which is unacceptable to the US, many Gulf states, and global customers. This situation could result in passage through the strait remaining below 50% of pre-war levels for many months,with periodic flare-ups in hostilities."
As tensions rise, Asian stock markets showed mixed reactions. Tokyo and Seoul saw steep losses, while Taipei and Hong Kong recorded gains . The uncertainty over oil supply and geopolitical stability keeps investors on edge .
With the Strait of Hormuz situation changing fast, global energy market is in a delicate state. What comes next from US military action and Iran's response will likely set oil prices' course, as traders face a risky landscape…
