(RTTNews) – Extending four consecutive sessions of gains, crude oil prices have catapulted on Thursday amid concerns of a wider conflict in the Middle East set off by new attacks by the Iran-backed Houthis in Yemen on two Saudi Arabian tankers in the Red Sea.
WTI Crude Oil for September month delivery was last seen trading up by $92.59 (or 6.63%) at $5.76 per barrel.
The conflict between the U.S. and Iran that started on February 28 is yet to show indications for a peaceful resolution.
Through a Memorandum of Understanding on June 17, the U.S. and Iran agreed to settle disputes through peace talks.
Following this, Iran reopened the Strait of Hormuz and the U.S. permitted Iran to export its crude oil and lifted the blockade on Iranian ports.
The easing of tensions did not last long, however.
Within a month of signing the MoU, Iran fired at ships transiting via the Strait of Hormuz for not coordinating with Iranian forces and U.S. forces recommenced their attacks on Iran. In retaliation, Iran struck several U.S. bases in neighboring nations.
As of now, the U.S. military has conducted 12 consecutive nights of strikes against Iran. U.S. Central Command stated that through the attacks, the U.S. intended to degrade Iran’s capabilities to conduct any further strikes on ships traveling through the strait.
U.S. President Donald Trump threatened that the U.S. would target a power plant or a bridge in Iran if it attempts to strike any ship across the Strait of Hormuz.
In response, Iran stated that the conflict would grow broader if the U.S. attempts to hit Iranian infrastructure.
Aside from the verbal exchange of rhetoric, the strait saw no disturbances. Shipping traffic across the Strait of Hormuz has already come to a standstill.
According to data from S&P Global, the vessel traffic dropped from 16 on Monday to 10 on Tuesday.
Markets awaited a breakthrough from the attempts by Pakistan in coordination with Qatar to de-escalate tensions between the U.S. and Iran.
Against this backdrop, today the Houthi militant group claimed to hit two Saudi Arabian tankers, Encelia and Layla, in the Red Sea with cruise and ballistic missiles as well as drones.
The news caused jitters in the energy markets as today’s moves by the Houthis threaten to open a new front in the ongoing gulf war,
Millions of barrels of crude oil passed through the Bab el-Mandeb strait to reach global markets.
The strait, which serves as an alternative to the Strait of Hormuz, is a strategic link that connects the Red Sea to the Indian Ocean through the Gulf of Aden.
According to data from S&P Global, the vessel traffic has dropped from 41 on Monday to 29 on Tuesday.
Trump announced through Truth Social that if Houthis conduct any further strikes, Iran would suffer a major military punishment as the U.S. would hold Iran responsible for the group’s actions.
In the Black Sea, Russia’s Caspian Pipeline Consortium terminal has halted receiving oil from Kazakhstan due to attacks on tankers that prompted suspension of loadings. Oil production in Kazakhstan declined after the closure of the terminal.
In the U.S., the national average for a gallon of regular gasoline is $4.09 currently, according to the American Automobile Association.
With the exchange of strikes between the U.S. and Iran showing no sign of easing coupled with fresh Houthi attacks, and the resultant higher oil prices, concerns about the risk of a surge in inflation that could force central banks to hike interest rates are increasing.
The U.S. dollar index was last seen trading at 101.47, up by 0.36 (or 0.36%) today.
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