Oil prices surge over 6% as tensions rise in Strait of Hormuz

Kathmandu. Crude oil prices surged by more than 6% on Monday after the Strait of Hormuz, a key global oil supply route, was closed again due to escalating tensions between the United States and Iran. After falling by nearly 9% last Friday, oil prices have spiked again following reports of ceasefire violations and mutual attacks.

In the international market, Brent crude prices rose by $6.11 (6.76%) to reach $96.49 per barrel. Similarly, U.S. West Texas Intermediate prices increased by $6.53 (7.79%) to settle at $90.38 per barrel. 

Both nations have accused each other of breaking the ceasefire agreement and attacking vessels, creating uncertainty in the energy market.

U.S. President Donald Trump stated on Sunday that his navy had seized an Iranian cargo ship attempting to breach the blockade. 

In response, Iran has maintained that it will not participate in the second round of peace talks as long as U.S. sanctions remain in place. Oil shippers have become increasingly wary after Iran closed the waterway shortly after claiming it had been reopened. The closure of this route, which accounts for nearly 20% of the world's total oil supply, is expected to deal a major blow to the global economy.

According to market analyst Saul Kavonic, the oil market is currently fluctuating based on social media comments from leaders of both countries rather than ground realities. Just on Saturday, more than 20 ships transported oil, gas, and fertilizer through this waterway, the highest number since March 1. 

However, ship operators are now expected to hesitate in sending cargo through the region until safe passage is guaranteed. With the U.S. warning of further airstrikes and Iran maintaining its blockade of the waterway, fuel prices are projected to rise further in the coming days.