Oil prices jumped early on Thursday as Iran declared the critical energy chokepoint, the Strait of Hormuz, closed after the US launched additional strikes against the Middle East oil producer.
Brent futures rose $1.48 or 1.59 per cent to $94.58 per barrel, and the US West Texas Intermediate (WTI) crude climbed $1.71 or 1.90 per cent to $91.74 a barrel.
Iran’s top joint military command announced the closure of the Strait of Hormuz on Thursday, including oil tankers and commercial ships, saying any vessel attempting passage will be shot at.
Market analysts noted that the renewed escalation in fighting prompted oil prices to rally in early morning trading.
On Wednesday, the US military said on X that commercial ships continue to transit in and out of the strait. It also said no US warships have been struck in the strait, after Iran’s state media reported US ships near the waterway were targeted by missiles and drones.
US forces began launching additional strikes against multiple targets in Iran on Wednesday, the latest in an escalating exchange of attacks that threaten to reignite a full-scale war, which was paused in early April when the two sides agreed to a fragile ceasefire.
Defence Secretary Pete Hegseth held a press briefing announcing further attacks on Iran, saying, “If we need to negotiate with bombs, we’ll negotiate with bombs.” US Central Command later described those attacks as targeting “Iranian military surveillance capabilities, communication systems, and air defence sites across Iran.”
In response to the attacks, Iran’s top joint military command then announced that the Strait was closed to all shipping.
President Donald Trump said the strikes would stop shortly, but that they would continue if Iran’s leaders did not sign an agreement with the US immediately.
Iran’s months-long blockade of the strait, which normally carries a fifth of global oil and gas shipments, has kept oil prices elevated.
The latest exchange of strikes between the US and Iran marks the most significant escalation in the conflict since both countries agreed to a fragile ceasefire in April. Since then, oil inventories have drained dramatically, and no tangible breakthroughs have been announced.
Crude oil inventories in the US decreased by 7.2 million barrels during the week ending June 5, according to new data from the Energy Information Administration (EIA). The EIA’s data release follows figures that were released by the American Petroleum Institute (API) a day earlier, which reported that crude oil inventories saw a draw of 9.119 million barrels in the period.
