US and Iran Strikes Threaten Reopening of Strait of Hormuz

US-Iran Tensions Spark Oil Price Increase

Oil prices rose by 0.9 percent on Monday as tensions between the US and Iran escalated. The increase was attributed to a renewed sense of uncertainty over shipping in the Strait of Hormuz, a key waterway that handles about one-fifth of global oil and liquefied natural gas trade.

Brent crude futures for August delivery reached $73.21 per barrel, 127 cents higher than the previous day’s price. The increase was largely attributed to concerns raised by market analyst Fabien Yip, who stated that the market had become overly optimistic about a return to normalcy in the region.

Over the weekend, US and Iranian strikes reignited doubts about a ceasefire agreement reached on February 28. The attacks on commercial vessels in the Strait of Hormuz were seen as a reality check for the market, which had largely unwound its war premium despite an agreement between the two countries.

Asian stock markets also reacted to the news, with Tokyo and Seoul experiencing losses while Hong Kong and Taipei saw gains. Japan’s Nikkei 225 fell by 0.7 percent, while South Korea’s Kospi dropped by 1.9 percent. The decline was attributed to concerns about the impact of artificial intelligence on tech firms’ earnings.

US President Donald Trump and Iranian President Masoud Pezeshkian signed a memorandum of understanding to end the war on June 17, but the agreement has faced strain due to ongoing hostilities and disagreements over its meaning. Talks between the two countries are set to take place in Doha, Qatar, on Tuesday.

Source: Al Jazeera