Oil prices are on track to gain around 12 per cent for the week following continued escalation of military strikes between the US and Iran.
Brent crude, the international benchmark for oil, is holding steady around the $85 per barrel mark after multiple US strike offensives against Iran this week.
Those strikes included hitting an oil tanker near Iran’s main export terminal, a significant escalation in the ongoing conflict between the two nations.
Iran’s state news agency reported overnight that seven people were killed in the latest round of US action, which targeted bridges in the south of the country.
The head of the International Energy Agency has sounded a stark alarm over rising oil prices as traffic through the Strait of Hormuz has been severely disrupted by the conflict.
“Oil security is still a critical issue,” IEA chief Fatih Birol told a Council on Foreign Relations event, underlining the gravity of the situation for global energy markets.
“We should be worried, and I am worried if the situation does not improve in the next few weeks,” Birol added, warning of potentially serious consequences ahead.
US marines boarded a vessel in the Strait of Hormuz overnight, with the country’s central command citing “verification” as the grounds for the operation.
Shortly after the boarding, US central command stated: “The Strait of Hormuz and the surrounding waters remain free and open, except for vessels attempting to violate America’s steel wall blockade.”
Iran’s government has responded defiantly, branding the crucial global shipping lane an “invincible red line” and vowing it will not allow any US interference in the waterway.
The Strait of Hormuz is one of the world’s most strategically vital chokepoints, through which a significant proportion of global oil supplies pass each day.
Any prolonged disruption to traffic through the strait would have far-reaching consequences for energy markets, supply chains, and economies across the globe.
Equity markets have so far shown resilience in the face of the escalating conflict, with stocks rising despite the mounting pressure on energy supplies and geopolitical stability.