Oil Climbs to Six-Week High as US-Iran Conflict Escalates and Shipping Risks Increase

Brent crude rose US$1.93 (2%) to around US$96 per barrel by 0011 GMT Thursday, its highest level since June 8, after settling at US$94.07 in the previous session. U.S. West Texas Intermediate (WTI) crude gained 1.7% to US$88.27, extending Wednesday's gains.

Escalating geopolitical tensions

The United States carried out a 12th consecutive night of military strikes targeting Iran after President Donald Trump said Washington would respond to attacks on commercial shipping in the Strait of Hormuz.

Iran's Revolutionary Guards claimed the Strait of Hormuz had been "completely closed" and reported a tanker fire near regional shipping lanes. The claims could not be independently verified.

Separately, the Houthis announced what they described as a naval blockade in the Bab el-Mandeb Strait. Maritime security organizations reported that the Saudi-flagged tanker Encelia was struck in the Red Sea, while the Houthis claimed that around 10 vessels had turned back.

Why Asia is closely watching

According to the International Energy Agency (IEA), the Strait of Hormuz carries around 15 million barrels of crude oil per day, representing roughly 34% of global seaborne crude trade. China and India together receive about 44% of those shipments.

Any prolonged disruption to shipping through the strait could increase energy import costs for Asian economies that rely heavily on Middle Eastern crude.

Supply provides partial offset

U.S. crude inventories increased by 2 million barrels last week, according to the Energy Information Administration (EIA), compared with a Reuters survey that had forecast a 1.1-million-barrel decline. The unexpected inventory build provided some counterbalance to supply concerns driven by geopolitical tensions.

Market focus

Investors are expected to continue monitoring developments in the Strait of Hormuz and the Red Sea, together with movements in global crude prices. These factors may influence energy market sentiment and inflation expectations if shipping disruptions persist.

Sources: Reuters, Investing.com, U.S. Energy Information Administration (EIA), International Energy Agency (IEA). This article is for informational purposes only and does not constitute investment advice.