(RTTNews) - Crude oil has catapulted on Monday as the gulf region gets enveloped in war-tension after the U.S. dispatches more soldiers to gulf while U.S. President Donald Trump warns Iran to open up the Strait of Hormuz right away or face obliteration. WTI Crude Oil for May month delivery was last seen trading up by $3.05 (or 3.06%) at $102.69 per barrel. The U.S.-Israel led war against Iran entered the fifth week today. Last Friday, Trump extended his earlier announced "pause" on all attacks on Iran's energy and power installations to resolve the conflict with Iran through diplomacy. Later, the U.S. also delivered a 15-point-peace proposal to Iran through Pakistan. Despite Trump's repeated claims of Iran negotiating with the U.S., Iran's senior parliamentarians and a section of Iranian media refuted his claims and asserted that Iran was not involved in any ceasefire talks. The re-opening of the Strait of Hormuz, which has been blocked by Iran, has been the nucleus of all U.S. peace attempts. However, since Iran ignored U.S. peace efforts and kept the strait effectively shut, oil transit concerns continue to grow higher day by day. Today, Trump once again reaffirmed that the U.S. was engaged with a "new and reasonable regime" to bring the war to an end and remarked optimistically that great progress has been made. Trump also warned that despite the progress, if for any reason Iran does not come for a deal, the U.S. will obliterate Iran's energy and power installations, oil wells and desalinization plants, and even confiscate Kharg Island from Iran. While his message gave a glimmer of hope on a quicker resolution to the conflict, it also increased concerns of a protracted gulf war. Meanwhile, the U.S. has deployed several military assets to the Middle East. Tension increased after the arrival of nearly 5,000 U.S. troops (including 2,500 U.S. Marines) in West Asia, signaling an inevitable U.S. military intervention if Iran disagrees with the U.S. peace offering. Already on March 24, around 2,000 paratroopers of the 82nd Airborne Division reached the gulf. Last weekend, U.S. Central Command announced that the USS Tripoli, carrying nearly 3,500 sailors and Marines from the 31st Marine Expeditionary Unit joined them. The Tripoli Amphibious Ready Group (ARG) is considered the most versatile and lethal response force of the U.S. Experts speculate that a ground invasion by the U.S. could be either to secure Kharg Island or to claim the reported 400 kg of enriched Uranium stockpile or to dissolve Iran's stronghold over the Strait of Hormuz and restore oil vessel traffic. Defying the U.S. threats, Iran has warned of greater retaliation to any U.S. offensive. Iranian parliament's speaker Mohammad Bagher Ghalibaf stated yesterday that Iran's soldiers are waiting for the arrival of American soldiers to "set fire" and punish them. Hezbollah militants from Lebanon, Houthi militia of Yemen, and Hamas in Gaza have pledged support to Iran. Analysts estimate that a ground-level military confrontation between the U.S. and Iran could drag on for months, leading to further escalation in oil prices. Major global central banks including the U.S. Federal Reserve leaned to contain inflation than addressing unemployment and hence have committed to keep the interest rates higher. In a discussion at the Harvard University Principles of Economic Class in Cambridge, U.S. Federal Reserve Chair Jerome Powell admitted that the current policy is in a good state to see how the current Middle East situation plays out and acknowledged that the economic effects of the war could not be guessed easily as of now. The U.S. dollar index was last seen trading at 100.47, up by 0.32 points (or 0.32%) today. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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A tanker identified as the Kaifan was struck by an unknown projectile northeast of Oman’s Limah in the Strait of Hormuz, according to a July 21 report from UK Maritime Trade Operations. No ships were observed transiting the strait that day. Attribution of the strike and links to prior incidents have not been confirmed by the vessel’s owner.
Goldman Sachs has projected Brent crude averaging $80 per barrel in the fourth quarter and $75 in the following year, conditional on reduced Middle East tensions, while noting upside risks from potential shipping disruptions in the Strait of Hormuz or Red Sea.
Brent prices rose above $91 per barrel amid recent U.S.-Iran exchanges and Houthi threats to Saudi shipments before edging lower on Tuesday. A senior Iranian official told Reuters that mediators had proposed a 10-day ceasefire to preserve an interim agreement.
US forces struck the tanker Settebello in the Gulf of Oman on June 10, killing three Indian crew members when munitions hit the engine room and adjacent areas. Maritime tracking data indicate the vessel had transported Iranian oil under US sanctions for several years and conducted offshore transfers prior to the strike.
The US military described the action as a precision operation, while reports note the ship was stationary at the time.
Iranian officials reported strikes on US radar and air defense sites in Kuwait and Bahrain, along with the interception of two oil tankers in the Strait of Hormuz. The United States conducted strikes on Iranian targets following the deaths of three US soldiers, with the Pentagon stating the actions aimed to degrade capabilities affecting shipping.
Houthi forces in Yemen announced plans to blockade Saudi ports, while both US and Iranian leaders issued statements on further escalation.