Crude oil prices increase by more than 2% in the global market

 

Crude oil prices increase by more than 2% in the global market

 

Global crude oil prices rose more than 2 percent on Tuesday.

The increase was driven by supply concerns, as the Strait of Hormuz remains largely closed and US allies have rejected calls to send warships to help tankers navigate the vital waterway, according to Reuters.

Brent futures rose $2.62, or 2.61 percent, to $102.80 a barrel, while US West Texas Intermediate crude rose $2.51, or 2.51 percent, to $96.01.

Brent futures fell 2.8% in the previous session, while West Texas Intermediate crude fell 5.3% as some ships were able to pass through the key passage.

The Strait of Hormuz, a key route for about 20% of the world's oil and liquefied natural gas trade, has been hit hard by the ongoing US-Israeli war with Iran (now in its third week), which has led to supply shortages, rising energy prices and concerns about inflation.

According to market analyst Tony Sycamore, "The risks remain. Just one missile fired by an Iranian militia or a mine laid in the path of a passing tanker could reignite the situation."

Several US allies on Monday rejected Donald Trump's appeal to send warships to protect shipping in the Strait of Hormuz, which the US president criticized, accusing Western allies of being ungrateful despite decades of support.

“Currently, oil markets are focused on how long the conflict will last, how long supplies in the Strait of Hormuz will be suspended, and how much damage the chaos will cause to the oil infrastructure in the Gulf,” said Priyanka Sachdeva, senior market analyst at Philip Nova.

Meanwhile, traders said news of a fire in the Fujairah oil industry zone following a drone attack during Asian trading hours also helped push prices higher.

The effective closure of the Strait of Hormuz has forced the United Arab Emirates, OPEC’s third-largest producer, to cut its output by more than half, sources said.

Iran has asked India to release three tankers it seized in February as part of talks aimed at ensuring safe passage for Indian-flagged or India-bound ships through the Strait of Hormuz.

To keep rising energy prices under control, the head of the International Energy Agency has suggested that member countries could release more oil than they have already agreed to release from the 400 million barrels of strategic reserves.

Israel has said it has detailed plans to continue the war for at least another three weeks, while its military hit various sites in Iran during the night.