Crude oil prices spiked by about $3 a barrel on Thursday as Iran tightened its grip on the Strait of Hormuz, with peace talks with the United States remaining distant.
Brent crude futures settled at $105.07 a barrel after gaining $3.16 or 3.1 per cent, while the West Texas Intermediate futures finished at $95.85 a barrel, up $2.89 or 3.11 per cent.
Progress toward reopening the passage remains stalled as Iran’s parliament speaker said the US blockade was “bullying” and a “flagrant breach of the ceasefire,” adding that negotiations would not resume with it in place.
US President Donald Trump said the blockade would continue. An American can wage war without Congressional approval for 60 days, a deadline which expires May 1.
Ahead of that, Reuters reported that air defences were engaging targets over Tehran. That followed reports of drone attacks on Iranian Kurdish opponents of the Iranian government at a base in Iraq.
President Trump also said in a social media post that he had ordered the US Navy “to shoot and kill any boat” mining the strait.
While he extended a ceasefire between the countries after a request by Pakistani mediators, Iran and the US are still restricting transit of ships through the strait, which carried about 20 per cent of daily global oil supplies until the start of the war on February 28.
This week, one ship passed through the waterway on Tuesday. However, by Wednesday, more ships tried, but Iran attacked two and reportedly seized two more.
The US also blockaded traffic to and from Iranian ports in the Persian Gulf, but it appears that the blockade has not stopped traffic completely. It was reported that as many as 34 sanctioned and Iranian-linked tankers moved in and out of the waterway between April 13 and 21.
The US military has intercepted at least three Iranian-flagged tankers in Asian waters and is redirecting them away from positions near India, Malaysia and Sri Lanka.
Meanwhile, the executive director of the International Energy Agency (IEA), Mr Fatih Birol, said the war in the Middle East and the closure of the Strait of Hormuz have created the largest energy security threat the world has ever faced.
“As of today, we’ve lost 13 million barrels per day of oil … and there are major disruptions in vital commodities,” Mr Birol said in an interview, adding that the IEA-coordinated record emergency release of 400 million barrels of oil stocks last month cannot offset the massive supply loss.