Oil prices rose in early trading Sunday as a standoff between Iran and the U.S. prevented tankers from using the Strait of Hormuz, the Persian Gulf waterway that is crucial to global energy supplies.
The price of U.S. crude oil increased 6.4 per cent to US$87.88 per barrel after trading resumed on the Chicago Mercantile Exchange. The price of Brent crude, the international standard, climbed 6.5 per cent to $96.25 per barrel.
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The market reaction followed more than two days of growing hopes and dashed expectations involving the strait. Iran, which effectively controls the passage, said Friday that it would fully reopen the passage off its coast to commercial traffic. Crude prices plunged more than nine per cent on the news.
Tehran reversed its decision on Saturday, after President Donald Trump said a U.S. Navy blockade of Iranian ports would remain in effect. Over the weekend, Iran’s Revolutionary Guard fired on several vessels. Trump reported the forcible seizure of an Iranian-flagged cargo ship that tried to get around the blockade.
The US-Israeli war against Iran, now in its eighth week, has created one of the worst global energy crises in decades. Countries in Asia and Europe that import much of their oil from the Middle East have felt the most impact of halted supplies and production cuts, although rapidly rising gasoline, diesel and jet fuel prices are affecting businesses and consumers worldwide.