NEW YORK: Oil prices rose more than 2 percent on Tuesday after reports of attacks on vessels near the Strait of Hormuz revived fears of disruptions to shipping through the critical energy transit route. Brent crude futures gained USD1.86, or 2.58 percent, to USD73.85 a barrel, while US West Texas Intermediate crude rose USD1.73, also 2.52 percent, to USD70.28 a barrel at 11:34 a.m. ET (1534 GMT).
“The overriding theme this morning is a ship being shot at in the Strait of Hormuz,” Saxo Bank analyst Ole Hansen said. “That’s bringing some geopolitical risk premium back into the price. It’s not a lot compared with what we’ve seen in the past, but it’s the main driver behind the bid in the market.”
A Qatari LNG tanker and a Saudi-flagged crude oil tanker were damaged near the Strait of Hormuz, sources said on Tuesday, after reports that Iran’s Revolutionary Guards fired missiles at ships in the waterway overnight. Qatar’s foreign ministry spokesperson said Tehran bore full legal responsibility for the attack and any resulting damage or consequences.
It is the first time an LNG ship from Qatar, a mediator in talks between Washington and Tehran, has been struck since the start of the Iran war at the end of February.
“It’s clear that the risk remains,” said Andy Lipow, president of Lipow Oil Associates, adding that companies still have to assess whether it is worth it or not to charter oil tankers through the strait.
Talks to reach a final deal between Tehran and Washington will not take place if US threats continue, Iran’s foreign minister said on Tuesday, following US President Donald Trump’s threat to “finish the job” unless a deal is done. Investors are monitoring talks between the US and Iran and their implications for shipping through the Strait of Hormuz, which prior to the beginning of the Iran war carried a fifth of the world’s daily supply of oil and LNG.