Oil Climbs Over 2% As Iran War Halts Supply

LONDON: Oil prices rose more than 2 percent on Tuesday, reversing some ​of the previous session’s losses, on worries about supply with the Strait of Hormuz mostly shut and US allies rebuffing calls to send warships to help tankers move through the vital waterway.

Brent futures jumped $2.62, or 2.61 percent, to $102.80 a barrel by 1:04 p.m. Saudi time, while US West Texas Intermediate crude gained $2.51, or 2.51 percent, to $96.01.

In the previous session, Brent futures settled 2.8 percent lower while US West Texas Intermediate crude slid 5.3 percent after some vessels sailed through the critical waterway.

The Strait of Hormuz — a ‌chokepoint for about ‌20 percent of the world’s oil and liquefied natural gas ​trade — ‌has ⁠been ​largely disrupted by ⁠the US-Israeli war on Iran, now in its third week, raising concerns about supply shortages, higher energy costs and rising inflation.

“The risks remain stark: It only takes one Iranian militia to fire a missile or plant a mine on a passing tanker to reignite the entire situation,” IG market analyst Tony Sycamore said in a note.

Several US allies rebuffed Donald Trump’s call on Monday to send warships to escort shipping ⁠through the Strait of Hormuz, drawing criticism from the US ‌president, who accused Western partners of ingratitude after ‌decades of support.

“For now, oil markets are fixated ​on the duration of the conflict, halted ‌supplies at Hormuz, and eventually the damage this chaos will leave on oil ‌infrastructure in the Gulf,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

Meanwhile, traders said prices were further supported after a fire broke out in the Fujairah Oil Industry Zone after a drone attack during morning trade in Asia, though no injuries were reported.

Middle East ‌crude benchmarks have soared to all-time highs, becoming the most expensive oil in the world, with traders blaming the price ⁠spike on reduced ⁠supply available for delivery.

The effective closure of the strait has forced the UAE, the Organization of the Petroleum Exporting Countries’ third-largest producer, to shut in production, reducing its output by more than half, two sources told Reuters.

Iran has asked India to release three tankers seized in February as part of talks seeking the safe passage of Indian-flagged or India-bound vessels out of the Gulf via the Strait of Hormuz, three sources with knowledge of the matter told Reuters.

To curb rising energy costs, the head of the International Energy Agency suggested member countries could release more oil, in addition to the 400 million barrels they have already ​agreed to draw from strategic reserves.

Israel said ​it has detailed plans for at least three more weeks of war as its military struck sites across Iran overnight.