Oil prices hit one-month high as US-Iran tensions escalate

Oil prices rose sharply on Tuesday, July 14, reaching their highest level in four weeks amid escalating tensions between the United States and Iran, Reuters reports.

The gains came as the United States restored its maritime blockade of Iran and exchanges of attacks intensified in and around the Strait of Hormuz, fueling concerns over global energy supplies.

As of 07:30 Baku time, Brent crude futures were up $1.50, or 1.8%, at $84.80 per barrel, while US West Texas Intermediate (WTI) crude gained $1.70, or 2.2%, to $79.84 per barrel.

During the previous trading session, Brent surged 9.6%, marking its largest single-day increase since May 2020. Prices are now at their highest level since the United States and Iran signed a memorandum of understanding on June 17 aimed at ending the conflict between the two countries.

On Monday, July 13, US forces carried out strikes against Iran for a third consecutive night. At the same time, US President Donald Trump reinstated a blockade on Iranian shipping and proposed a 20% fee for providing security to vessels transiting the Strait of Hormuz.

"The latest escalation, including the U.S. reinstatement of the blockade and Iranian responses, has clearly injected fresh risk into the market," KCM Trade chief market analyst ​Tim Waterer said.

He added that while a full closure had not occurred, the competing objectives of both sides had made the supply picture highly uncertain.

Shipping data from July 13 also showed that the number of tankers transiting the Strait of Hormuz had dropped over the previous 24 hours to its lowest level in two months.

"The key variable to monitor is the physical movement ​of crude through the ​Strait of Hormuz. Any meaningful ⁠blockage of tanker traffic, prolonged reduction in vessel movements, or disruption to export flows would likely trigger another leg higher in oil prices," Phillip Nova analyst Priyanka ​Sachdeva noted.

By Jeyhun Aghazada