Oil prices climbed Thursday due to escalating concerns over the prolonged closure of the Strait of Hormuz and broader U.S.-Iran conflict.
Brent crude saw a 2.05% increase, reaching $83.07 per barrel, while U.S. West Texas Intermediate crude rose 2.60% to $76.60.
The U.S.-Iran conflict intensified Wednesday following a U.S. strike near Sri Lanka and Senate Republicans backing President Trump's military actions against Iran. A resolution to halt hostilities failed to pass.
Iraq, OPEC's second-largest producer, has significantly reduced output due to storage and export limitations. Qatar, the leading liquefied natural gas exporter, declared force majeure on exports, with recovery expected in at least a month.
Shipping through the Strait of Hormuz, vital for global energy, has halted for five days. A large explosion was reported near Kuwait, with a small craft seen departing the area.
J.P. Morgan notes that while Iran has largely avoided targeting critical energy infrastructure, shipping risks remain exceptionally high, with approximately 329 oil vessels currently stranded in the Gulf. The firm suggests logistical constraints, not geological issues, are the primary limit to the duration of the U.S. campaign.