Oil Climbs as US-Iran Strikes Escalate, Adding to Confusion Over Hormuz Closure

Oil rose after the US and Iran exchanged further airstrikes.

Brent crude traded above $78 a barrel on July 12, while West Texas Intermediate hovered near $74, Bloomberg reported. European natural gas prices also climbed as much as 2.7% intraday.

Iran said it was closing the Strait of Hormuz until further notice. US Central Command denied that and said it had launched additional strikes to guarantee freedom of navigation through the waterway.

The renewed tensions are putting a war premium back into oil prices. Crude had stabilized earlier as a temporary peace agreement between the US and Iran raised expectations for increased Persian Gulf supply, but the latest clashes have revived upward pressure.

The International Energy Agency also warned that the conflict could disrupt plans to rebuild global oil inventories in the second half of this year.

Ship traffic through the Strait of Hormuz has fallen sharply as well. Only two tankers were recorded approaching the passage on July 12. About 20% of global oil and liquefied natural gas supplies pass through the strait. The Joint Maritime Information Center said the southern shipping lane managed by Oman remained available.

A diplomatic solution also appears to be slipping further away. Iranian Parliament Speaker Mohammad Bagher Ghalibaf said the era of one-sided agreements was over and argued that talks could resume only after the US fulfilled earlier commitments on passage through the Strait of Hormuz and the normalization of Iranian oil exports.

US President Donald Trump, by contrast, declared that the ceasefire with Iran was over while also saying he remained willing to continue negotiations.