According to a report by The Wall Street Journal, US President Donald Trump has directed his advisers to prepare for an extended blockade of Iran.
The report said the administration intends to maintain pressure on Iran by further restricting shipping to and from Iranian ports, thereby tightening the squeeze on the country’s economy and oil exports.
Brent crude futures for June delivery rose 52 cents, or 0.47 per cent, to $111.78 a barrel as of 0154 GMT, marking the eighth consecutive day of gains. The June contract is due to expire on Thursday. Meanwhile, the more actively traded July contract was up 0.4 per cent at $104.84 a barrel.
US West Texas Intermediate crude for June delivery gained 57 cents, or 0.57 per cent, to $100.50 a barrel, following a 3.7 per cent jump in the previous session. WTI has now risen in seven of the past eight trading sessions.
Yang An, an analyst at Haitong Futures, said the recent surge in oil prices has been driven largely by the disruption in the Strait of Hormuz. He noted that if the US extends its blockade, supply constraints could intensify further, adding additional upward pressure on prices.
Although a ceasefire has been reached in the conflict involving the US, Israel and Iran, the broader situation remains unresolved as negotiations continue over a formal end to hostilities. Iran has halted shipping through the Strait of Hormuz, a vital passage that normally carries around 20 per cent of the world’s oil and liquefied natural gas supplies, while the US continues to restrict access to Iranian ports.
Washington is seeking a halt to what it describes as Iran’s nuclear weapons programme. Iran, in turn, is demanding compensation for the latest conflict, relief from economic sanctions, and some degree of control over the Strait of Hormuz.
The ongoing disruption in Hormuz has also led to increased drawdowns from global oil inventories. Market sources said the American Petroleum Institute reported that US crude stockpiles declined for a second consecutive week.
For the week ended April 24, crude inventories fell by 1.79 million barrels. Gasoline stockpiles dropped by 8.47 million barrels, while distillate inventories declined by 2.60 million barrels.