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Oil prices rose above $90 a barrel for the first time in more than a month, as the US carried out a fresh wave of attacks on Iran and the number of American troops killed in the conflict rose.
Prices for Brent crude, the international benchmark, gained 2.4 per cent to $90.25 a barrel on Monday during trading in Asia. Prices have climbed more than 23 per cent this month, putting them on track for their largest monthly gain since March, when hostilities were still in full swing.
This is the first time oil has traded above $90 since June 11.
The rise in prices comes as tit-for-tat strikes between the US and Iran escalate, with Washington confirming additional military casualties over the weekend and Tehran targeting critical energy and water infrastructure in the region. At least three American troops have been killed in strikes since Friday, with the possible remains of a fourth discovered in Jordan.
The US carried out a ninth consecutive night of strikes against Iran, saying it targeted a range of military installations, coastal surveillance sites and communications networks to diminish Tehran’s ability to attack commercial shipping in the Strait of Hormuz.
“Both sides are testing the limits of the agreement,” said Anthony Yuen, head of energy strategy at Citigroup. “A lot of shipping companies will be hesitant to go through the strait.”
He added: “We are pricing in a bull case of oil prices rising because of tensions escalating. Can they find an off-ramp quickly? Not necessarily.”
The Islamic Revolutionary Guard Corps said two oil tankers were “blown up and brought to a halt” late on Sunday while attempting to transit through the strait’s “unsafe” southern route.
“This is our land,” the IRGC statement said, adding there was no “legal” justification for any interference by the US military “from thousands of kilometres away”. It said no oil, gas or fertiliser could pass through the waterway as long as US hostile actions in the region continued.
“The Iranians seem to be digging their heels in about control of the Strait of Hormuz,” said Mansoor Mohi-uddin, chief macro strategist at the Bank of Singapore. “In the very short term the risk is that oil prices have to go even higher.”
In another statement, the IRGC said it had targeted the US military’s C-17 transport aircraft and P-8 reconnaissance planes at Jordan’s Aqaba airport, with “intelligence” provided by Jordanian nationals. The guards said its forces also attacked US military assets at the Ali Al Salem air base in Kuwait including a hangar for MQ-9 Reaper drones.
UK maritime authorities said on Monday that a vessel north of Oman was on fire. “The cause of the fire has not been verified at this time,” the UK Maritime Trade Operations centre warned. “Vessels are advised to transit with caution.”
Markets were relatively calm apart from oil. The dollar edged down 0.1 per cent against a basket of key trading partners. Futures for the S&P 500 and Stoxx Europe 600 were flat while Asian stock markets were mixed.
US officials have said the primary objective of strikes now is to assure energy can safely flow through the Strait of Hormuz.
