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Renewed tensions between the United States and Iran in the Strait of Hormuz have once again pushed up global fuel oil prices. Significant increases were observed in the prices of both international benchmarks, Brent Crude and US WTI crude, immediately after the start of trading in Asian markets on Friday.
Market Situation
According to British media outlet BBC, Brent crude oil prices in the international market rose by approximately 1.5 percent to $101.60 per barrel at the start of trading on Friday. Although the increase surpassed 2 percent earlier in the day, it later stabilized slightly. Meanwhile, the price of West Texas Intermediate (WTI) crude oil in the United States increased by 1.1 percent to $95.87 per barrel.
Allegations of Tit-for-Tat Attacks
Both countries are blaming each other for the escalation of tensions:
US Claim: The US military alleges that Iran carried out a ‘provocative’ attack as one of their warships was leaving the Persian Gulf via the Strait of Hormuz. Washington claims that missiles, drones, and small naval vessels were used in this attack. The US forces stated that they retaliated in self-defense and that none of their ships were damaged.
Iran’s Claim: On the other hand, Iran’s military has accused the United States of first violating the ceasefire by attacking its vessels and an oil tanker. The country’s state media claims that a US warship suffered ‘significant damage’ in retaliation. However, the United States has denied this claim.
Ceasefire in Uncertainty
This incident has raised new concerns about the future of the ongoing ceasefire between the United States and Iran. Notably, on April 21, US President Donald Trump had extended the ceasefire indefinitely with the aim of continuing peace talks.
Trump has described the current situation as a ‘minor setback’ and claimed that the ceasefire is still in effect. However, he warned that military action could be resumed if Iran does not come to an agreement.
Global Impact
Approximately one-fifth of the world’s total oil and gas transportation passes through the strategically vital Strait of Hormuz. Consequently, even minor tensions in this region pose a significant risk to global energy security and market stability.