Oil Tops $119 as US Plans to Extend Iran Blockade
Oil prices soared following reports that the US is preparing for an extended blockade of Iran. US crude rose 7.6% to $107.52 a barrel on Wednesday, and Brent rose to $ 119.54 per barrel, up 7.44%.
This marks the fourth straight month of gains for crude oil prices, which are up 5% in April so far, building on the over 50% rally seen in March due to the onset of the US-Israeli war with Iran.
The energy crisis continues to worsen amid little sign of resolution to the Middle East crisis, which has entered its third month. Crude oil prices remain elevated due to energy supply disruptions through the Strait of Hormuz, a critical chokepoint accounting for 20% of global oil passage.
Iran wants U.S. acknowledgement of its right to enrich uranium for what it says are peaceful, civilian purposes. It has a stockpile of about 440 kilograms or 970 pounds of uranium enriched to 60%, material that could be used for several nuclear weapons if further enriched.
Iran’s parliament speaker and top negotiator, Mohammad Baqer Qalibaf, said Trump was trying to divide Iranians and force Iran to surrender through the blockade.
According to media reports, Chevron chief executive Mike Wirth met President Donald Trump at the White House on Tuesday to discuss how to limit the fallout from the conflict on American consumers.
Oil traders appear to have taken the meeting as a sign that the effective closure of the Strait of Hormuz will continue for a prolonged period.
The meeting follows separate reports from the Wall Street Journal that US President Donald Trump has instructed aides to prepare to extend the ongoing blockade of Iran’s ports, in an effort to squeeze the country’s economy.
Iran has said it will continue to disrupt traffic travelling through the Strait of Hormuz in response to the US blockade. The price of oil has seen sharp swings since the start of the war, as the key Strait of Hormuz has been effectively closed for weeks due to the conflict.
Iran has severely restricted shipping through the strait — which usually carries about a fifth of the world’s supply of oil and liquid natural gas — in response to US and Israeli strikes that began on 28 February.
Earlier this month, Tehran warned that any vessel that approaches the strait would be targeted. The US then announced that its forces would intercept or turn back vessels travelling to or from Iran’s ports.
