Oil prices surge due to tensions over Iran

World oil prices surged on August 17 amid heightened tensions between the US and Iran and new risks to supplies through the Strait of Hormuz. Brent again exceeded $90 per barrel and rose to $91.19 during trading.

At the close of the main trading session, Brent futures settled around $90.87 per barrel, gaining about 2.7%. American WTI oil also rose — its price climbed to about $83.7 per barrel.

One of the main drivers was the end of the 60-day period the US and Iran had set for reaching a more sustainable agreement. The deadline passed on August 17, but the sides have not reached a compromise. US President Donald Trump made it clear that Washington is not interested in simply extending the previous deals if Tehran does not agree to US terms.

Iran, in turn, warned that it is ready to shift to more offensive actions if diplomatic efforts completely fail. Market attention is especially focused on the Strait of Hormuz — one of the most important routes for global oil and liquefied natural gas trade.

Additional impetus to prices came from Iranian media reports about the seizure of an oil tanker in the Strait of Hormuz. At the time of publication, the ship's name and cargo were not officially identified, and independent confirmation of all circumstances of the incident was lacking. Nevertheless, the report heightened traders' concerns about new shipping disruptions.

Before the current conflict, about a fifth of global oil and gas trade passed through the Strait of Hormuz. Therefore, any restrictions on tanker movement, attacks on ships, or threats of further military escalation quickly affect oil prices.

The rise in oil prices could eventually increase pressure on fuel prices and transportation costs in countries dependent on energy imports. Further dynamics will largely depend on whether Washington and Tehran can resume talks and reduce risks to shipping in the region.

Based on materials from: The Wall Street Journal, Folha de S.Paulo, Reuters