Oil Rises More Than 2% After Iran Declares Strait of Hormuz Closure

International oil prices extended gains after Iran declared the closure of the Strait of Hormuz and news emerged of additional U.S. airstrikes on Iran.

Reuters reported on June 10 that Brent crude futures rose 2.47% to $95.40 a barrel. West Texas Intermediate crude gained 2.89% to $92.63 a barrel. Both contracts jumped by more than $3 earlier in the session.

The advance was triggered by Iran's formal declaration that it was closing the Strait of Hormuz. In a statement, Iran's Joint Command said it was shutting the strait and banning the passage of all vessels, including oil tankers and commercial ships. It added that any vessel attempting to transit the waterway would be considered a target.

The U.S. rejected that claim, saying traffic through the strait was continuing. The U.S. military said commercial ships were still passing through the Strait of Hormuz and that no American warship had come under attack.

The announcement came shortly after additional U.S. strikes. U.S. Central Command said a day earlier that, on the president's orders, it had carried out fresh airstrikes on military surveillance facilities, communications networks and air defense sites inside Iran.

Markets are concerned that an escalation in the military conflict between the U.S. and Iran could prolong disruptions to Middle East oil supplies. The Strait of Hormuz is a critical shipping lane through which about 20% of global oil and natural gas shipments pass.

Separately, the U.S. Energy Information Administration said U.S. crude inventories fell by 7.2 million barrels last week to 426.5 million barrels. That exceeded market expectations for a decline of 4 million barrels. The U.S. has increased crude production since the Middle East conflict began in February to help offset supply gaps, but inventories have continued to fall.