Oil prices surged more than two dollars a barrel on Thursday after Iran announced the closure of the Strait of Hormuz to oil tankers and commercial vessels following renewed US strikes on Iranian targets.
Brent crude futures rose $2.30, or 2.47%, to $95.40 a barrel. US West Texas Intermediate added $2.60, or 2.89%, to $92.63, having climbed more than three dollars earlier in the session.
Iran’s Khatam al-Anbiya military headquarters announced the closure, warning that any vessel attempting to pass through the strait would be fired upon. The US military, however, said commercial shipping was continuing to move through the waterway and denied that any of its warships had been targeted there, pushing back on reports carried by Iranian state media that American vessels near the strait had come under missile and drone attack.
US forces launched additional strikes on multiple targets inside Iran at 5:15pm Eastern time on Wednesday, the latest escalation in a conflict that has threatened to reignite into full-scale war. Fighting had briefly paused in early April under a fragile ceasefire agreement, but that appears to have broken down.
The supply disruption is already visible in US inventory data. The Energy Information Administration reported on Wednesday that crude stockpiles fell by 7.2 million barrels to 426.5 million barrels in the week ending June 5, nearly double the four million barrel decline analysts had forecast in a Reuters poll. Total US crude inventories, including strategic reserves, have now dropped by roughly 79 million barrels since the conflict with Iran began on February 28, as the world’s largest oil producer has stepped in to offset supply lost to the effective closure of the strait.
