Oil Rallies as Iran Warns Against US Plan to Escort Vessels
Oil prices increased on Monday amid rising tensions in the Strait of Hormuz. The United States has indicated its support for commercial shipping in the area, while Iran has warned that it will target any American intervention.
Brent crude was trading at $110.58 per barrel, while US benchmark West Texas Intermediate rose approximately 2.11% to reach $104.09 per barrel, up from $101.94 during the previous session.
US Central Command (CENTCOM) announced on Sunday that its forces will “support merchant vessels seeking to freely transit” the Strait of Hormuz under President Donald Trump’s initiative, “Project Freedom.”
CENTCOM stated that this support will include guided-missile destroyers, more than 100 land and sea-based aircraft, multi-domain unmanned platforms, and 15,000 service members.
“Our support for this defensive mission is essential to regional security and the global economy as we also maintain the naval blockade,” said CENTCOM Commander Admiral Brad Cooper.
However, Axios reported on Sunday that the new initiative may not involve US Navy vessels directly escorting commercial ships. Instead, US Navy ships will be “in the vicinity” if needed to prevent Iran’s military from targeting vessels transiting the strait, according to two American officials.
This initiative comes as ongoing disruptions in the Strait of Hormuz continue to impact global markets. Energy, fertilizer, and key industrial commodities have experienced sharp price increases over the past two months.
Tensions remain high after Iran’s Islamic Revolutionary Guards Corps (IRGC) issued a warning stating that it would target US forces if they attempt to approach or enter the strait.
“We warn that any foreign armed force, especially the invading American army, will be attacked if they attempt to approach and enter the Strait of Hormuz,” the IRGC said in a statement carried by state-run broadcaster IRIB.
The statement emphasised that any safe passage and navigation in the strait must occur in coordination with Tehran “under any circumstances.”
Lingering concerns over supply risks in the Middle East continue to influence market sentiment, although expectations of higher output from the OPEC+ alliance have limited further price increases.
In reaction to UAE exit from the oil cartel, seven OPEC+ members, including countries from the Organisation of the Petroleum Exporting Countries and allied producers, are set to increase production by 188,000 barrels per day in June, a move largely in line with market forecasts. JSE Index Opens Soft after Sluggish Close
