Oil Prices Climb Past $106 as Iran Deploys New Tanker Tactics in Hormuz
Oil prices rose on Wednesday after two vessels were struck in the Strait of Hormuz and Iranian officials told Reuters they were deploying new tactics to target ships, keeping crude above $100 a barrel.
The oil prices Iran Hormuz story pushed Brent crude futures up 63 cents, or 0.6 per cent, to $106.32 a barrel, while US West Texas Intermediate gained 66 cents, or 0.7 per cent, to $94.80. Both contracts had climbed more than $1 in early trade before paring gains.
Oil prices Iran Hormuz: two vessels struck in the strait
A container ship and a tanker were hit by unknown projectiles within the Strait of Hormuz, the United Kingdom Maritime Trade Operations said on Tuesday.
Iranian officials declined to give details of the new strategy, but one said Iran had started using different offensive tactics against vessels it considered in violation of its restrictions about 10 days ago, and that this had led to more attacks on such ships.
Tehran is seeking to keep oil prices high and influence the US midterm elections in November, according to the officials.
Analysts see a calculated pressure move
“The fact that Iranian officials are openly admitting to undermining US efforts to keep oil prices under control speaks volumes about the real intentions behind the so-called ‘peace talks’,” said Priyanka Sachdeva, head of market insights at Phillip Nova.
She added that Iran was well aware of its geographical importance and the damage higher oil prices could inflict on the global economy, and might not shy away from using that advantage.
UBS analyst Giovanni Staunovo said the ship attacks and military strikes between Saudi Arabia and the Houthis were supporting prices as markets worried about lower oil exports from the region, though exports had held up so far.
Wider escalation
The Iran-allied Houthis attacked an administrative building belonging to state-owned oil firm Saudi Aramco in Dhahran, causing a limited fire, Saudi Arabia’s energy ministry said on Wednesday. The group has fired ballistic missiles and drones at Saudi Arabia over the past week, and Riyadh’s international airport has been hit four times. Pakistan has already felt the fallout, with PIA suspending Riyadh flights after the strikes.
Israeli media reported that Prime Minister Benjamin Netanyahu had pressed US President Donald Trump last week to restart strikes on Iran before the November midterms. Trump reportedly told Netanyahu to prepare but made no firm commitment. Netanyahu denied the reports.
On the supply side, ING commodity analysts flagged Saudi Arabia’s plan to expand its East-West pipeline by 1.2 million barrels per day within months as a factor that could cool prices. The risk, they noted, is what happens to those barrels once loaded on tankers.
What it means for Pakistan
Pakistan imports almost all of its petroleum, so a sustained price above $100 feeds straight into the daily fuel price mechanism. Today’s Rs2.71 cut in petrol could quickly reverse if Hormuz disruptions deepen. Traders have already warned that oil could spike far higher in a worst case. Earlier this week, an Iranian strike on a tanker in the strait showed how fast the situation moves. Diplomatic efforts continue, with Putin offering to help end the Iran war.
Why are oil prices rising?
Two vessels were struck in the Strait of Hormuz and Iran told Reuters it is using new tactics against tankers, raising fears of supply disruption.
What are Brent and WTI prices now?
Brent crude is trading around $106.32 a barrel and WTI around $94.80, both up on the day.
How does this affect Pakistan?
Pakistan imports nearly all its fuel, so higher crude prices feed into the daily fuel price mechanism and can quickly erase cuts like today’s Rs2.71 petrol reduction.
