Oil prices rise for a fifth day as US-Iran hostilities threaten supply routes
Oil prices hit their highest in more than a month on Thursday, rising for a fifth day as escalating hostilities between the United States and Iran stoked fears of supply disruptions across oil transit routes.
Brent crude futures were up $3.80, or 4%, at $97.87 a barrel by 0744 GMT for their highest since June 3.
U.S. West Texas Intermediate crude climbed $2.80, or 3.2%, at $89.63 after touching its highest since June 11.
Iran's Revolutionary Guards said an oil tanker caught fire after an explosion while attempting to follow a mined route in the southern area of the Strait of Hormuz near the coast of Oman and that two others had turned back.
The Guards said the strait was under their control and "completely closed" while U.S. actions continued in the region, warning that no tanker would be allowed to enter or leave without coordination with Iran.
"The immediate outlook for crude oil remains supportive as markets price a worrying probability of supply interruptions in a second chokepoint," said Pepperstone research strategist Ahmad Assiri.
Besides the renewed conflict over control of the Strait of Hormuz, Yemen's Houthis have opened a new front by targeting vessels carrying Saudi oil in the Bab el-Mandeb strait and trying to impose a naval blockade of Saudi Arabia.
The Iran-aligned Houthis said on Thursday that they struck two Saudi oil tankers as part of their naval blockade.
Goldman Sachs said that oil flows through the Bab el-Mandeb strait have averaged nearly 9 million barrels per day over the past month, including nearly 4 million bpd that might be difficult to reroute with the blocking of multiple chokepoints in the region.
The U.S. military said it had completed a 12th consecutive night of attacks on Iran, hours after U.S. President Donald Trump vowed to destroy an Iranian bridge or power plant every time Iran shoots at a ship in the Strait of Hormuz.
Goldman expects oil prices to retain most of their recent gains through July and August as global inventories continue to decline, supported by lower Middle East production, seasonal summer travel demand and a sharp slowdown in releases of strategic petroleum reserves.
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