US-Iran war drives crude prices higher

Commercial tankers attempting to transit the Strait of Hormuz continue to come under drone assaults, as the conflict between Washington and Tehran deepens.

IMAGE: Flags of the US and Iran. Getty Images

The 60-day US-Iran peace accord signed on 17 June – setting a deadline for ending the Middle East war – has expired, and Washington and Tehran are further apart than they were two months ago.

Brent’s price has surpassed the $90/bbl mark once again, after Tehran said it will shift to a “full offensive” policy against Washington, as ongoing negotiations fail to reach a positive outcome, Reuters reported.   

The announcement comes on the heels of Washington's decision to not extend the ceasefire that had collapsed in under a month, the report added.

US President Donald Trump also warned of potential military strikes against Oman, should it proceed with an agreement with Iran to co-manage the Strait of Hormuz, heightening volatility in an already precarious environment.

“Sentiment remained supported by US President Donald Trump's decision not to extend the US-Iran peace agreement and continued security concerns in the Strait of Hormuz, raising fears of supply disruptions,” two analysts from ING Bank noted.

Strait of Hormuz security concerns persist

A merchant ship was struck by an unknown projectile while conducting an outbound transit of the Strait of Hormuz via the Omani corridor, the United Kingdom Maritime Trade Operations (UKMTO) agency reported.

“The impact caused damage to the engine room and resulted in a crew casualty,” the UKMTO said.

Another cargo vessel was boarded by eight unauthorised persons, about 4 nautical miles south of Mareeyo Somalia, the UKMTO reported.

“The CSO of a cargo vessel reports being boarded by 8 armed unauthorised persons who have taken control of the vessel,” the agency said.

The movement of commercial vessels via the Strait of Hormuz has stalled as a result, with only 12 crossings recorded on Sunday, according to market intelligence reported Windward. Eight tankers went into the waterway, according to the data, and four exited it.

By Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online