Oil prices climbed more than $2 a barrel on Thursday after Iran declared the Strait of Hormuz fully closed following overnight US strikes, Ada Derana reported, with Brent crude futures rising $2.30, or 2.47 percent, to $95.40 a barrel and US West Texas Intermediate (WTI) gaining $2.60, or 2.89 percent, to $92.63.
US crude futures had gained more than $3 earlier in the session before settling slightly off the intraday peak. Brent has now retraced the entirety of the recent ceasefire-driven drop to a two-week low of $98.83 on May 25 and is back toward the $90-plus range the market has held for most of the war.
The price move followed Iran’s joint military command announcement that the Strait of Hormuz would be closed to all vessels including oil tankers and commercial shipping, with any ship attempting passage to be “shot at.” Tehran also said no US warships had been struck in the strait, after Iranian state media earlier reported that US ships near the waterway had been targeted by missiles and drones.
US forces began launching additional strikes against multiple Iranian targets at 5:15 PM EDT (21:15 GMT) on Wednesday, the latest escalation in an exchange of attacks that threatens to reignite a full-scale war paused in early April when the two sides agreed to a fragile ceasefire. Iran’s months-long blockade of the strait, which in peacetime carries roughly a fifth of global oil and gas shipments, has kept prices elevated throughout the war.
US crude inventories fell by 7.2 million barrels to 426.5 million barrels in the week ended June 5, the Energy Information Administration said on Wednesday, against a Reuters poll consensus for a 4-million-barrel draw. Including strategic reserves, US crude stockpiles have now fallen by 79 million barrels since the Iran war began on February 28, as the world’s largest producer has stepped in to fill supply gaps left by the effective closure of the strait.
For Sri Lanka, which imports virtually all its crude through Hormuz-routed shipping, a sustained move above $95 reverses the modest cost relief built up during the May ceasefire window and raises the risk of fresh upward pressure on CPC fuel prices.
Sources: Ada Derana — Oil prices climb $2 as Iran announces closure of Strait of Hormuz following US strikes.
