Geopolitical tensions in the world's most critical oil chokepoint escalated sharply Wednesday, pushing global crude prices back above $100 a barrel.
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Oil tops $100 a barrel after Iran seizes 2 ships
Iran’s Revolutionary Guard seized two commercial vessels in the Strait of Hormuz Wednesday, sending Brent crude up 3.5% to $101.91 a barrel and casting doubt on a fragile US-Iran ceasefire.
“A complete ceasefire only makes sense if it is not violated by the maritime blockade and the hostage-taking of the world’s economy,” the speaker of Iran’s parliament, Mohammad Bagher Ghalibaf, said in a social media post.
The surge in Brent crude, the international benchmark, was mirrored by a 0.9% rise in West Texas Intermediate futures to $92.96. The escalation comes just hours after US President Donald Trump announced an extension of a two-week truce, even as a US naval blockade of Iranian ports continues to disrupt trade.
The seizure threatens to unravel nascent peace talks and highlights the extreme vulnerability of global energy supplies, with about 20% of the world's crude oil passing through the narrow waterway before the recent disruptions. The continued closure of the strait could trigger a sustained global supply shock.
The Islamic Revolutionary Guard Corps (IRGC) said its naval forces had seized the MSC Francesca and the Epaminondas, two container ships managed by Mediterranean Shipping Company, for allegedly “tampering with navigation systems” and disrupting maritime safety. The action followed reports of gunfire against three separate vessels in the vital shipping lane. According to a relative of one of the 40 crew members aboard the two ships, around 20 armed Iranians stormed one of the vessels. Both ships have reportedly been taken toward Iran's port of Bandar Abbas.
This direct military action follows a sharp warning from an unnamed Iranian security official who told Al Jazeera that the recent US seizure of an Iranian ship would make American vessels “legitimate targets.” The US Navy intercepted and seized an Iranian-flagged cargo ship, the Touska, on Sunday as part of its blockade, an act Iran’s foreign minister called a “violation of the ceasefire.”
Strait Remains Choked
Ship traffic through the Strait of Hormuz remained far below normal levels Wednesday, with only a handful of vessels transiting the waterway that previously handled more than 100 ships daily. The blockades and attacks have created a chilling effect on commercial shipping, despite the formal extension of the ceasefire.
The UK’s Foreign Secretary, Yvette Cooper, welcomed the truce extension but called for a “full reopening of the strait without restrictions or tolls,” stating that any return to hostilities would be a “major setback for the region, the global economy and cost-of-living.” However, Iranian officials maintain that a full reopening is impossible while the US blockade of its ports remains in effect.
This article is for informational purposes only and does not constitute investment advice.
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