Oil Surges Over $2 as Iran Closes Strait of Hormuz Following Intensified US Strikes

Oil Surges Over $2 as Iran Closes Strait of Hormuz Following Intensified US Strikes​

Oil prices witnessed a dramatic surge on Thursday after Iran formally announced the closure of the critical energy chokepoint, the Strait of Hormuz. This move followed escalating U.S. strikes against targets within Iran, threatening to reignite large-scale conflict between the two nations. The geopolitical turmoil has driven up crude prices as concerns over supply chain stability mount globally.

Oil Markets React to Geopolitical Crisis​

Brent futures climbed robustly, rising $2.30 or 2.47%, settling at $95.40 a barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude saw an even sharper gain, surging $2.60 or 2.89% to reach $92.63. The rise comes as Iran’s joint military command declared the Strait of Hormuz closed for all commercial and oil tankers.

Iran stated that any vessel attempting passage through the strait would be targeted by force. This declaration adds extreme tension to an already volatile energy market, which relies heavily on this vital maritime artery.

Dispute Over Shipping Activity in Chokepoint​

The actions of Iran clash sharply with official statements from U.S. military forces regarding shipping transit. The U.S. military stated on Wednesday that commercial ships were still able to move through the strait as usual. Furthermore, Washington disputed reports from Iranian state media claiming that U.S. warships near the waterway had been targeted by missiles and drones.

This escalating exchange of attacks is a significant development, as it threatens to push both countries into a full-scale military confrontation. The conflict was previously held in check by a fragile ceasefire agreement brokered in early April.

Impact on Global Supply and Inventories​

The closure of the Strait of Hormuz creates immediate concerns given that this narrow waterway typically accounts for about a fifth of global oil and gas shipments. Iran’s months-long control over the strait has historically been sufficient to keep oil prices elevated, regardless of short-term market fluctuations.

Adding another layer of complexity, the EIA reported on Wednesday that U.S. crude inventories had fallen by 7.2 million barrels for the week ending June 5. This draw was notably larger than analysts' expectations in a recent Reuters poll, which anticipated a 4 million barrel reduction.

Inventory Drawdowns Since Conflict Escalation​

Looking at broader supply trends, U.S. crude stockpiles have significantly decreased since the start of hostilities between Iran and the U.S. on February 28. Crude inventories, including those held in strategic reserves, have dropped by a cumulative total of 79 million barrels. These drawdowns occurred as the world's largest oil producer stepped up to compensate for the effective closure of this crucial international strait.