Global Oil Prices Surge as US-Iran Tensions Escalate at Strait of Hormuz

Kathmandu. Crude oil prices have surged sharply in the global market following the failure of efforts to end the ongoing conflict between the United States and Iran. Oil prices climbed above $100 per barrel on Monday after the US Navy prepared to blockade the strategically vital Strait of Hormuz. 

Investors are concerned that oil exports from Iran could be completely halted, a fear that is directly impacting the international market. On Monday, London's Brent crude futures rose by $7.60, or nearly 8 percent, to reach $102.80 per barrel. 

Similarly, the price of US West Texas Intermediate also increased by $8.31, or 8.6 percent, to settle at $104.88. Energy experts noted that market instability has returned after peace talks concluded without a resolution, despite hopes for a peace agreement following a two-week short-term ceasefire.

US President Donald Trump announced on Sunday that a blockade of the Strait of Hormuz would begin. This blockade is estimated to halt the flow of approximately 2 million barrels of Iranian-related oil daily. President Trump has acknowledged that oil and gas prices may remain high until the midterm elections in November. 

He also hinted at the potential political impact of the attack carried out on Iran six weeks ago. According to the US Central Command, the enforcement of a ban on all maritime traffic from Iranian ports has been in effect since early Monday morning.

Meanwhile, Iran's Revolutionary Guards have warned of a strong retaliation against the US move. Iran stated that any military vessel entering the Strait of Hormuz would be considered a violation of the ceasefire and would be met with a firm response. In the meantime, Saudi Arabia has reported that it has repaired its East-West pipeline, which was damaged during the conflict, and has regained the capacity to pump 7 million barrels of oil per day.