Crude Prices Surge Amid Escalating Tensions in Strait of Hormuz

Crude prices continued to inch higher on Friday as the situation in the Strait of Hormuz again deteriorated, with Iran and the United States capturing commercial vessels, weakening prospects of peace talks between the two nations. Global oil benchmark Brent crude was hovering at around $105.5 per barrel, about 0.4 percent higher, during Asian trading hours after touching the $107 mark. The US’ WTI crude also gained marginally to reach the $96 per barrel mark. The commodity has surged by about $10 per barrel, or over 10 percent, this week as hopes of peace talks and de-escalation weakened, even after the US President Donald Trump extended the ceasefire indefinitely. US stocks fell overnight, with the S&P 500 index dipping 0.41 percent and the tech-heavy Nasdaq Composite dropping 0.89 percent. Iran’s demand to take control over the Strait of Hormuz has stalled the peace talks. The crucial waterway caters to a fifth of the global oil and gas supply. The US capture of an Iranian ship near the strait and Iran’s response with the seizure of two commercial vessels have raised safety concerns for oil traders. On Wednesday, only nine commercial vessels could pass through the strait, declining from 15 vessels on Monday. Before the start of the war in late February, about 130 vessels used to pass through the waterway every day. Trump on Thursday warned of destroying any Iranian boats laying mines in the strait. The statement came after the US announced the seizure of a tanker carrying sanctioned Iranian oil. Also, the US’ blockade of Iranian ports has been extended, as Trump said that no ship will be able to enter or leave the strait without the approval of the US Navy. According to reports, the world has lost an oil supply of about 500 million barrels of oil in the seven weeks of the West Asian war.