Global oil prices have jumped to $91 per barrel on the back of the escalation of military hostilities between the US and Iran that brought concerns about crude flow disruption in the strategic Strait of Hormuz back to the market, Reuters reported.
Crude prices jump as US and Iran exchange fire. Oil prices rallied on Wednesday with Brent Crude surging more than 3 percent to settle at $91.25 a barrel, according to Reuters, while US West Texas Intermediate was up to $86.36. Brent gains after US Navy attacked the Iranian missile launchers on Larak Island in the Strait of Hormuz and Tehran carried out retaliatory attacks on US Military Bases in Jordan.
The latest bout of hostilities has sparked concerns over the potential for further disruption of crude shipments through the waterway that constitutes 30% of global seaborne crude. The volumes of oil shipments through the strait have been considerably lower since the conflict commenced.
Investors have to decide if this development is going to escalate further militarily, causing more disruption of crude coming from Gulf exporters.
Union Bank of Switzerland analyst Giovanni Staunovo said the market would be watching this potential escalation. Although crude prices were on track for a slight monthly slide in August earlier this month, the possibility for greater volume through the strait had relieved certain supply constraints.
