Oil Rallies on Renewed Strait of Hormuz Attacks, Sanctions
Global oil prices rally on Thursday on renewed tensions between the United States (U.S.) and the Iranian military over the Strait of Hormuz, despite ongoing peace talks between Washington and Tehran.
New sanctions imposed by the US administration on the Persian Gulf Strait Authority (PGSA), an entity established by Iran to regulate transit through the Strait of Hormuz, heightened concerns over global oil supply and accelerated upward momentum in oil prices.
At last look, the international benchmark Brent crude traded at $94.72 per barrel, up around 2.67% from the previous close of $92.25.
US benchmark West Texas Intermediate (WTI) increased about 2.76% to $91.13 per barrel, compared with $88.68 in the previous session.
In a statement, the US Treasury Department said the PGSA had been added to the Office of Foreign Assets Control’s sanctions list due to its links with Iran’s Islamic Revolutionary Guard Corps.
The statement noted that measures would be implemented against shipowners who enter into transit agreements with the PGSA or pay transit fees to the organisation.
The sanctions decision came after US President Donald Trump rejected reports in Iranian state media claiming that Iran and Oman were preparing a draft agreement to jointly manage maritime traffic in the Strait of Hormuz.
The proposed agreement reportedly aimed to restore commercial vessel traffic through the Strait of Hormuz to pre-war levels within one month.
Trump largely dismissed claims that Iran and Oman would gain control over the strait, emphasising that the Strait of Hormuz constitutes international waters and should remain open to all countries.
Iran’s effective blockage of transit through the Strait of Hormuz following tensions with the US and Israel that began in late February had triggered sharp increases in oil prices, affecting nearly one-fifth of global oil supply.
Meanwhile, expectations for the reopening of the Strait of Hormuz in the short term weakened amid renewed reciprocal airstrikes between the US and Iran this week and the deterioration of the ceasefire reached in early April.
Experts estimate the likelihood of reaching an agreement on the Strait of Hormuz at 70%, while warning that uncertainty about the waterway’s future persists.
Experts also noted that the cost of transit insurance through the Strait has risen significantly and that it remains unclear whether Iran will impose transit fees. U.S., Iran Trade Attacks Near Strait of Hormuz Amid Ceasefire
