Crude Oil Prices Surge Amid Strait of Hormuz Uncertainty; International Response to US Call Lags

Tehran. Crude oil prices are continuously rising in the global market. Uncertainty about market supply has increased following the effective blockade of the Strait of Hormuz, a major global fuel transport route.

The price of Brent crude, considered a major indicator for the global oil market, rose by nearly 3 percent on Sunday, reaching up to $106 per barrel. However, on Monday morning, it was trading slightly lower at $104.63 per barrel. This is nearly 1.5 percent higher than the closing price of the previous day.

At the time this news was prepared, around 11:42 AM Nepali time on Monday, Brent crude was trading at $104.47 per barrel. This is 1.29 percent higher than the closing price at the ICE Exchange in London the previous day. At the same time, the US benchmark, US Crude, stood at $97.14 per barrel. This is nearly 0.31 percent higher than the closing price of the previous day.

The primary reason cited for the rise in oil prices is US President Donald Trump's call for other countries to assist in reopening the Strait of Hormuz. As about 20 percent of the world's oil supply passes through this route, its disruption has significantly impacted the global energy market. However, clear support for Trump's proposal has not yet materialized. None of the countries he mentioned, such as China, Japan, France, and the UK, have publicly committed to sending naval vessels to secure the Strait of Hormuz.

Commenting on NATO, Trump stated in an interview with the Financial Times that if there is no response or a negative response to his proposal, the future of the alliance could be very poor. Meanwhile, both Japan and Australia stated on Monday that they have no plans to send ships to the Hormuz region. Iran has nearly halted shipping traffic through the Strait of Hormuz in retaliation for attacks carried out by the US and Israel. The International Energy Agency stated that this has caused the largest disruption to global energy supply in history.

Since the war began, crude oil prices in the global market have increased by more than 40 percent. The war has also increased concerns about whether rising fuel prices will push the global economy into a recession. According to the UK Maritime Trade Operations (UKMTO), since the war began, only more than five ships per day have been passing through the Strait of Hormuz. Under normal circumstances, an average of 138 ships transit this route daily. UKMTO also reported that at least 16 commercial vessels have been attacked since the war started on February 28.

Previously, Trump had stated that if necessary, the US Navy could be sent to protect commercial vessels passing through the Strait of Hormuz. This Strait of Hormuz is located between Iran, Oman, and the United Arab Emirates. US administration officials, however, indicated that warships would only be dispatched after Tehran's military capability is further weakened, and such an operation is expected to commence soon.