Oil prices rose early on Wednesday for the fourth consecutive trading session as the collapsed U.S.-Iran ceasefire precipitated a new crisis in the Strait of Hormuz and Iran threatened to close “all other export corridors that benefit the US and its allies.”
As of early trade in Europe on Wednesday, Brent Crude prices were up by 0.83%, remaining above the $85 per barrel mark. Meanwhile, the U.S. benchmark, WTI Crude, was up above $80 after climbing 0.89%.
Oil prices have been rising since last Friday, for a total gain of about 12% as of Tuesday’s close.
In just a few days, the steady uptick in Hormuz traffic turned into a trickle of a handful of tankers braving the chokepoint as hostilities returned this weekend. Iran struck tankers in the Strait of Hormuz, and the U.S. hit Iranian targets and reinstated the naval blockade.
As the U.S. blockade went live early on Wednesday Middle Eastern time, Iran’s Islamic Revolution Guards Corps (IRGC) threatened to close “all other export corridors that benefit the US and its allies”, according to reports in Iranian media cited by Reuters.
“Regional energy exports are either shared by all, or denied to all,” the Revolutionary Guards said in ?a statement carried by Iran’s IRNA state news agency on Wednesday.
The Iran-aligned Houthis in Yemen may be used for blocking the Bab el-Mandeb Strait, a major global chokepoint between Yemen and the Horn of Africa, connecting the Red Sea to the Gulf of Aden, analysts have warned since the war began on February 28.
Earlier this week, reports emerged in Iranian media that the Houthis are prepared to block Bab el-Mandeb if Saudi Arabia continues to attack Yemen.
The Bab el-Mandeb Strait is part of what is now Saudi Arabia’s key crude oil export terminal at Yanbu on the Red Sea amid constrained flows through the Strait of Hormuz.
By Charles Kennedy for Oilprice.com
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