Oil hits one-month high as US-Iran battle clouds Strait of Hormuz view | Oil and Gas News

Oil prices rose to their highest level in a month as hostilities between the United States and Iran continued for a third straight day, dampening hopes for a return to normalcy in the Strait of Hormuz.

Brent crude, the world’s main benchmark, rose 2 percent on Tuesday, extending a 9.6 percent gain from the previous day.

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Brent futures for September delivery were at $84.91 a barrel as of 03:30 GMT, the highest since June 15.

After easing pre-conflict tensions following the signing of a US-Iran peace accord last month, Brent has risen nearly 17 percent from its pre-war price in late February.

The US Central Command on Monday announced the third day of strikes on Iran, saying its forces had targeted Tehran’s ability to attack “innocent civilians and commercial shipping” in the Strait of Hormuz.

Iranian officials said they targeted two oil tankers in the Strait and fired on US warships in Kuwait and Bahrain in retaliation for the incident.

Adding to the market volatility, US President Donald Trump said on Monday that the US would resume blocking Iranian ports and begin charging ships as a “guardian” of the sensitive waterway.

“Crude oil is rapidly deteriorating and the brutal return cannot be reduced until the market sees the claims of both parties,” June Goh, an oil analyst at Sparta Commodities in Singapore, told Al Jazeera, referring to the emergency oil increase by the US government, which the Trump administration has imposed.

After threats in recent weeks amid hopes of a permanent peace deal between Washington and Tehran, traffic on the route has dropped amid a growing threat of violence against commercial vessels.

A total of 57 voyages were recorded from Friday to Sunday, a drop of more than 50 percent compared to the previous week, according to ship tracking platform MarineTraffic.

About 130 ships passed through the river every day before the US and Israel invaded Iran in late February.

“Traffic through Hormuz is stopping, going back – or lower – to our initial speed of the MOU,” Rory Johnston, founder of oil research firm Commodity Context, told Al Jazeera.

“The oil market has been very patient during this crisis, mainly because of the amount of production that we have been able to do to offset the depth of the shock,” Johnston said.

“Unfortunately, many of those cushions have been depleted, leaving us vulnerable to a resurgence in March and April.”

The Trump administration wants to reassure the markets that the problem is still open for shipping, even though Iran announced on Sunday that the waterway is closed “until further notice”.

The US Department of Energy said on Monday that 8.5 million barrels of oil had passed through the river in the previous day with the help of the US military, explaining that the flow was “in line with recent volumes.”

“The U.S. military will ensure that oil continues to flow, with or without Iran, to ensure that markets are well-stocked,” the department said.

Bart Melek, head of global trading strategies at TD Securities in Toronto, Canada, said oil prices are likely to rise again as the US-Iran conflict resumes.

“I suspect that moving to $100 is possible, if it appears that the weight loss problem is real and growing,” Melek told Al Jazeera.