Oil prices climbed on Thursday after U.S. President Donald Trump threatened to hit Iran with new economic sanctions, as the two countries remained deadlocked over the Strait of Hormuz.
Benchmark Brent oil futures rose 2.1% to $93.57 a barrel by 04:43 ET (08:43 GMT), while U.S. West Texas Intermediate crude futures advanced 2.0% to $87.56 a barrel. Crude prices touched their highest levels since July 24 following five straight sessions of gains.
Markets were bracing for a protracted standoff in the Strait of Hormuz after Trump said Washington will impose stricter economic restrictions against Iran.
“I am announcing the MOST CRUSHING ECONOMIC OPERATION EVER TAKEN AGAINST ANY COUNTRY! This will be Economic Warfare and Isolation on an unprecedented scale,” Trump said in a social media post.
Trump did not detail just what the new sanctions would entail, but called on U.S. allies to also join the effort. He warned that entities doing business with Iran would also face economic penalties, a statement that analysts at ING interpreted as a signal of a “further escalation in U.S. efforts to isolate Iran.”
Tehran is already subject to U.S. sanctions on its oil exports. Washington has also maintained a naval blockade on Iranian ports. Iran had responded to U.S. aggression by effectively blocking the Strait of Hormuz, disrupting around 20% of the world’s oil and liquefied natural gas supplies.
Recent shipping data showed commercial traffic through the Strait of Hormuz has slowed to a fraction of pre-war levels, despite repeated claims by U.S. officials that the waterway is open to tanker traffic.
Trump had on Wednesday reiterated his claims that the U.S. held full control of the strait, and that negotiations with Iran could resume “at some point.”
Iran has largely denied that any dialogue with the U.S. is currently taking place, and has demanded that Washington fulfil the conditions of a framework peace deal signed in June before there can be any progress on an arrangement to unblock the strait. The Memorandum of Understanding, as the interim agreement was known, lapsed earlier this week, with few indications from the U.S. and Iran that it would be renewed.
Source: Investing.com
