Oil prices surge after Tehran mulls shutting Strait of Hormuz

Oil prices have jumped following US air strikes on Iranian nuclear facilities over the weekend, sparking fears of a wider regional conflict and potential disruption to energy flows.

Brent crude and US West Texas Intermediate (WTI) both surged more than four percent before paring gains.

Strait of Hormuz under renewed threat

The sharp rise in prices follows a US decision to join Israel in bombing Iran’s nuclear sites at Fordow, Natanz and Isfahan, prompting renewed threats from Tehran to close the Strait of Hormuz — a key oil transit chokepoint that handles roughly one-fifth of global crude shipments.

Iran’s Press TV reported that the Iranian parliament had approved a motion supporting the closure of the Strait.

While Tehran has made similar threats in the past, it has never enacted the move.

Analysts warn that even without a full closure, increased tension and perceived risks to shipping routes could lead to higher freight and insurance costs, limiting oil flows out of the region.

"The risks of damage to oil infrastructure have multiplied," said June Goh, senior analyst at Sparta Commodities.

"Shippers will increasingly stay out of the region."

Goldman Sachs said that if the Strait of Hormuz were partially blocked — halving oil flows for a month — Brent prices could briefly spike to $110 per barrel. However, the bank currently assumes no major disruption.

Brent has already climbed 13 percent since the Israel’s war against Iran began on 13 June, while WTI is up around 10 percent.

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Source: TRT