Oil hits $105 amid renewed Middle East tensions

Oil prices rose from around $100 per barrel on Wednesday to over $105 as of Thursday following the failure of Iran and the United States to agree on a ceasefire deal to reopen the Strait of Hormuz.

Oil prices had earlier fallen from $115 to $88 on Friday when the two countries entered a ceasefire agreement. However, this was not sustained as Iran reportedly reclosed the route due to the US blockade.

On April 13, the US imposed a blockade that was said to “completely halt” economic trade going in and out of Iran by sea, including vessels carrying goods that could be used by Iran in the war against the US and Israel.

On Thursday, President Donald Trump ordered the US military to “shoot and kill” small Iranian boats suspected of deploying mines in the Strait of Hormuz. This came a day after Iran again demonstrated its ability to disrupt traffic through the channel.

According to Associated Press, Trump’s post on social media came shortly after the US military seized another tanker associated with the smuggling of Iranian oil, escalating a standoff with Tehran over the strait through which 20 per cent of all crude oil and natural gas traded passes.

“I have ordered the United States Navy to shoot and kill any boat, small boats though they may be … that is putting mines in the waters of the Strait of Hormuz,” Trump posted, adding that US minesweepers “are clearing the Strait right now.”

He added, “I am hereby ordering that activity to continue, but at a tripled-up level!”

Meanwhile, AP reports that it was still unclear when, or if, the two sides would meet again in the Pakistani capital, Islamabad, where mediators are trying to bring the countries together to reach a diplomatic deal.

Negotiations initially planned for this week could not happen as Iran insists it will not attend until the US ends its blockade on Iranian ports and ships. Similarly, the United States insists it will not take part until Tehran opens the strait to international traffic.

The Defence Department released video footage earlier on Thursday of US forces on the deck of the Guinea-flagged oil tanker Majestic X, which was seized in the Indian Ocean.

The footage emerged a day after Iran’s paramilitary Revolutionary Guard attacked three cargo ships in the strait, capturing two of them, in an assault that raised new concerns about the safety of shipping through the waterway.

The powerful head of Iran’s judiciary, Gholam Hossein Mohseni Ejei, said three “violating ships” in the strait were “subject to enforcement” on Wednesday.

There are reports that about 34 tankers linked to Iran have bypassed the US blockade since it began, according to the Financial Times.

The report said 19 of the vessels exited the Persian Gulf through the blockade, while 15 entered from the Arabian Sea heading toward Iran.

Six of the outbound tankers were carrying Iranian crude, with total cargoes of about 10.7 million barrels, it said.(Punch)