Crude Oil Prices Rise Over 2% Amidst US-Iran Tensions

Kathmandu. Crude oil prices have increased in the international market on Thursday. The price of crude oil has increased by more than 2 percent after Iran's Revolutionary Guards stated that they targeted a US military base in retaliation for an attack by the US in the Bandar Abbas port area.

On that day, at 8:45 GMT, the price of Brent crude futures on ICE Exchange's Comex division increased by $2.38, or 2.52 percent, to $96.67 per barrel.

Meanwhile, on the Comex division of the New York Mercantile Exchange, US West Texas Intermediate (WTI) futures also increased by $2.24, or 2.53 percent, to $90.92 per barrel.

Earlier on Wednesday, both major indices had fallen by more than 5 percent to a one-month low due to the possibility of a ceasefire agreement between the US and Iran and hopes of the Strait of Hormuz reopening.

However, tensions in West Asia have resurfaced a few hours after US President Donald Trump denied news that a deal was close with Tehran.

Iran's Revolutionary Guards had stated that they retaliated against a US military base after the US attacked an Iranian drone operating center near the Strait of Hormuz.

John Evans, an analyst at PVM Oil Associates, said that the exchange of airstrikes seems to have become the language of negotiation. "As long as there is hope for a deal, prices may remain stable for some time. But as global oil reserves decrease and the impact of more than one billion barrels of oil stuck in the Strait of Hormuz becomes apparent, the market may come under pressure again," he said.

Meanwhile, two supertankers and a ship carrying liquefied natural gas (LNG) have crossed the Strait of Hormuz this week after turning off their transponders.

According to LSEG and Kepler ship-tracking data, these ships are heading towards India and China. The US Petroleum Institute reported that crude oil reserves in the US decreased by 2.8 million barrels last week. This is the sixth consecutive weekly decrease in oil reserves.