US and Iran exchange fire in Strait of Hormuz, oil prices surge

US-Iran Clashes in Strait of Hormuz Spark Oil Price Surge

Oil prices surged on Thursday as clashes between the United States and Iran in the Strait of Hormuz pushed their fragile ceasefire to the brink. The price of Brent crude rose by as much as 7.5 percent during a volatile trading session, before easing as Asian markets opened on Friday morning.

As of 03:00 GMT, the international benchmark stood at $101.12 per barrel, down from its day’s high of $103.70. The latest increase came after the US and Iran exchanged fire in the critical waterway, which is a key conduit for about one-fifth of global oil and natural gas supplies.

US Central Command (CENTCOM) reported that it launched strikes on Iran following an attack by Iranian missiles, drones, and small boats on three US Navy guided-missile destroyers. Iran’s Khatam al-Anbiya Central Headquarters accused the US of violating the ceasefire by attacking two vessels in the vicinity of the waterway.

The situation has led to a near standstill in shipping in the strait since late February, amid concerns over Iranian attacks on massive oil tankers that transport much of the world’s energy supplies. The estimated shortfall in daily production is approximately 14.5 million barrels.

Asian stock markets opened lower on Friday due to heightened tensions, with Japan’s Nikkei 225, South Korea’s KOSPI, and Hong Kong’s Hang Seng Index each falling more than 1 percent. On Wall Street, the benchmark S&P 500 fell about 0.4 percent overnight after reaching an all-time high the previous day.

Source: Al Jazeera