Oil Prices Surge as US Strikes Iranian Targets and Blockades Hormuz Strait

Escalation in the Strait of Hormuz and Global Energy Prices

The U.S. Central Command stated that American forces executed a new series of attacks on dozens of targets in Iran to prevent Tehran from threatening maritime traffic. These actions followed the renewal of conflicts between Washington and Tehran, while new attacks on energy infrastructure in the Middle East have further heightened investor fears regarding potential supply disruptions. Data from Trading Economics indicates that benchmark Brent crude moved at a level of about $80 per barrel, while U.S. WTI crude traded at approximately $75 per barrel.

Associated Press (AP) reported that Brent crude rose at one point by 4.7 percent to 79.59 dollars per barrel, while U.S. WTI crude increased by 4.8 percent to reach 74.85 dollars per barrel. Earlier, oil prices had returned to levels seen before the conflict between the U.S. and Iran began, following a temporary agreement and the resumption of transport through the strait. However, new waves of airstrikes have reversed this trend. Iran has responded by targeting countries housing U.S. bases in the region, including Kuwait, Bahrain, and Jordan.

Transit Fees and Market Instability

President Trump stated that the Strait of Hormuz will remain open with or without Iran and announced that the United States would charge a 20 percent tax on other cargo passing through the maritime passage. The impact on shipping is already visible; data from the tracking platform Kpler showed that only six ships passed through the Strait of Hormuz on Sunday, the lowest level in five weeks. Among the tankers that left the strait were the Very Large Crude Carrier (VLCC) Humanity, carrying about two million barrels of Iranian crude, and Capaten Andreas, carrying about 500,000 barrels of Kuwaiti crude. Data from IranShipping also confirmed that the number of vessels passing through the strait dropped to the lowest level in several weeks.

For more on this story, see Oil Prices Surge as US and Iran Exchange Military Strikes in Persian Gulf.

Broader Economic Impact

The conflict has extended to the natural gas market, where prices in Europe rose by nearly five percent to about 50.8 euros per megawatt-hour (MWh). According to the Amsterdam TTF exchange, the price of gas stood at 50.830 euros per MWh at 13:30. Meanwhile, bitcoin weakened on the Asian market as oil prices rose, fueling fears of inflation. The oldest cryptocurrency fell by 2.4 percent to 62,600 dollars as of 12:45 Singapore time, dropping below its 200-week moving average. The second-largest cryptocurrency, ether, lost 2.5 percent of its value.

European markets are currently recording mixed results as investors await a key week featuring quarterly financial reports from the largest U.S. banks and inflation data from the United States. According to market data from 9:30, WTI crude rose by 3.72 percent to 74.058 dollars per barrel, while Brent recorded a growth of 3.79 percent to 78.846 dollars per barrel.

European Energy Vulnerability

Europe remains particularly vulnerable due to a long-term reduction in the number of refineries, making the region more dependent than other major regions on supplies from the Middle East. Great Britain, France, and Germany are noted as being particularly exposed. According to data from the consulting firm Energy Aspects as of June 18, Europe could face a shortfall of nearly 600,000 barrels per day in the third quarter of this year. In response, European countries have increased imports of jet fuel from the U.S. and Asia, boosted domestic refinery production, and utilized existing reserves to maintain airport supplies.

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