Brent Rises by 4% Over Strait of Hormuz Lockdown
Brent rose by 4% on Tuesday as the Strait of Hormuz Lockdown stoked pressures on the supply side. Oil prices increased on Tuesday due to worries that ongoing tensions between the US, Israel, and Iran could lead to further supply disruptions and rising energy costs.
International benchmark Brent crude rose to $103.89 per barrel, a 4% increase from the previous close. Meanwhile, US benchmark West Texas Intermediate (WTI) climbed 3.2% to $96.91 per barrel, up from $93.88 in the previous session.
Crude prices rebounded after a decline of about 5% in the prior session. Although some vessels managed to pass through the Strait of Hormuz, restricted transit and the continued closure of this vital waterway indicate that supply risks remain.
Tensions among the US, Israel, and Iran have now entered their third week, with no signs of de-escalation. Iran has warned that it may target US-affiliated industries in the Middle East following recent attacks on Kharg Island, a significant export terminal.
Over the weekend, US President Donald Trump urged at least seven countries, including China, to help reopen trade through the Strait of Hormuz. However, some allies signalled that they had no plans to send ships to the region, contributing to ongoing uncertainty.
The Strait of Hormuz, which accounts for approximately 20% of the world’s oil supply, remains closely monitored by markets. Reports indicate that some tankers flagged from India and Pakistan passed through the strait, which Iran effectively closed earlier this month.
While Iran has stated that it would allow vessels from certain countries to pass, it has aimed to target ships connected to the US and its allies.
Efforts to reopen the strait and permit passage for specific tankers had initially lowered prices in the previous session. Nonetheless, the ongoing conflict in the Middle East and concerns about prolonged supply disruptions continue to exert upward pressure on oil prices.
Additionally, rising energy prices are fueling inflation concerns, leading to expectations that global central banks may maintain tighter monetary policies. Investors are closely monitoring this week’s meetings of the US Federal Reserve, the European Central Bank, and the Bank of Japan. Zenith Bank Hits 52-Week High, Market Cap Now N4.2trn
