Brent crude hit $119 a barrel as traders weighed reports of a longer U.S. blockade of Iran and continued disruption in the Strait of Hormuz.
Brent crude climbed to $119 a barrel on Wednesday afternoon, its highest level so far this month, as oil markets reacted to reports that the United States is preparing for a prolonged blockade of Iran.
The move marked a rise of nearly 7% in a single day and underscored how sharply energy prices have been swinging during the war in the Middle East. The Strait of Hormuz, a critical route that normally carries about a fifth of the world’s oil and liquefied natural gas supply, has been effectively closed for weeks amid the conflict.
The BBC reported that energy executives, including Chevron chief executive Mike Wirth, met President Donald Trump at the White House on Tuesday to discuss ways to limit the impact of the conflict on American consumers. Traders appeared to view the meeting as a sign that the closure and blockade could last longer than previously hoped.
The Wall Street Journal, citing U.S. officials, reported that Trump had instructed aides to prepare to extend the blockade of Iran’s ports as part of an effort to increase economic pressure on Tehran. Iran has said it will continue disrupting traffic through the Strait of Hormuz in response to the U.S. blockade.
Iran has severely restricted shipping through the strait since U.S. and Israeli strikes began on Feb. 28, and Tehran warned earlier this month that any vessel approaching the strait would be targeted. The U.S. later said its forces would intercept or turn back vessels travelling to or from Iranian ports. BBC Verify analysis found that at least four vessels tracked from Iranian ports appeared to have crossed the U.S. blockade line.
The benchmark price remains well above pre-conflict levels, despite recent pullbacks. Brent fell to $90 a barrel on April 17 after a ceasefire between Israel and Lebanon was announced, but has risen steadily over the past 12 days as the U.S. blockade continued.
The economic pressure is being felt inside Iran as well. The country’s annual inflation rate has risen to 53.7%, according to the Statistical Center of Iran, while the rial has fallen to a record low. Iran’s government said last week that about two million people had lost jobs directly or indirectly because of the war.
Lindsay James, an investment strategist at Quilter, said the impact in the UK has so far been largely limited to higher petrol and diesel prices, but warned that “every day that passes without a resumption of supply sees the risk of physical shortages and steeper price rises on a range of goods increasing.”
Trump urged Iran on Wednesday to “get smart soon” and sign a deal after days of deadlock. The next signal for markets is whether the blockade is formally extended — and whether shipping through Hormuz begins to reopen or tightens further.
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