Oil prices surge past $85/barrel as US-Iran tensions escalate
What's the story
Oil prices have surged past the $85-a-barrel mark, amid fears of supply disruptions in the Middle East. The spike comes after the US reinstated a naval blockade on Iran and intensified military action against it. The move has raised concerns over crude supplies passing through the strategically important Strait of Hormuz, leading to an increase in Brent crude and US West Texas Intermediate (WTI) prices.
Market response
Brent crude futures rose by 1.19% to $85.74 a barrel
Brent crude futures rose by $1.01 or 1.19% to $85.74 a barrel, while WTI gained $0.75 or 0.95% to $80.09 a barrel.
The increase comes after Brent had already jumped 9.6% in the previous session, its biggest one-day rise since May 2020.
This rally has pushed oil prices to their highest levels since the US and Iran signed a memorandum of understanding on June 17, aimed at ending the conflict between them.
Strategic moves
Trump reinstates Iranian shipping blockade, intensifies military action
The latest market developments come after US President Donald Trump's decision to restore a blockade on Iranian shipping in the Strait of Hormuz, along with new military operations against Iran.
"We're hitting them very hard. And it'll continue, and we'll see what happens," Trump told reporters in the Oval Office.
"We're knocking out all their offensive capability and we're controlling the straits. We're putting the blockade back," he added.
Policy shift
US to charge countries for securing commercial shipping
Trump also announced that the US would charge countries for securing commercial shipping through the Strait of Hormuz.
This is a major policy shift from the long-standing US position of allowing free navigation through this vital waterway.
The move comes as tensions continue to rise in the region, with Iran launching retaliatory attacks across West Asia.
Escalation
UAE tankers hit by Iranian missiles
The United Arab Emirates Ministry of Defense has confirmed that two UAE oil tankers sailing through the southern lane of the Strait of Hormuz were hit by Iranian cruise missiles.
The attack killed one Indian crew member and injured eight others.
Meanwhile, US Central Command (CENTCOM) said American forces have begun a third consecutive night of strikes on Iranian military targets in response to these developments.