Oil prices set to rise as US charges ships 20% for Strait of Hormuz passage

The Iran Islamic Revolutionary Guard Corps (IRGC) has warned that prevailing intervention by the United States on the Strait of Hormuz could trigger higher crude prices than they were before the ceasefire deal.

The group said on Monday that continued US interference in the chokepoint “could lead to greater incidents in the global oil and gas sector.”

Fresh tension rose in the Middle East last Tuesday after Iranian attacks on commercial vessels in the Strait, a conduit for a fifth of the world’s crude and natural gas, and continued to escalate during the weekend after the US retaliated with multiple strikes targeting 80 Iranian sites.

Invariably, Iran ordered the Strait closed again, shutting off every ounce of hope by maritime operatives of yet another ceasefire agreement.

In a notice carried by Reuters, the Revolutionary Guards said that an end to the US military interventions in the Strait was the only way in which the IRGC would restore regular shipping traffic.

“Continued interference could lead to greater incidents in the global oil and gas sector,” Iran’s IRGC warned.

Currently, markets are struggling to digest all the noise about whether the Strait is passable safely, but they have started to price in, again, some kind of renewed disruption in the Hormuz traffic.

This was reflected in rising oil prices and falling equities and government bond yields early on Monday, on expectations that a longer disruption could stoke inflation fears.

As of the time of reporting 3:51 p.m. (WAT), Brent crude is nearing $80 per barrel, rising by more than three percent. While West Texas Intermediate is currently at $74 per barrel.

Various ship-tracking tools and analytics firms have seen an uptick in dark-mode transits through Hormuz this weekend, while no vessel had braved the chokepoint, at least not any that would be visible on tracking services.

“Escalation has slowed vessels transiting the strait to a trickle, renewing concerns over oil supply tightness through the third quarter,” ING’s commodities wrote in a note.

Amidst the rising tension, the US military said it had completed strikes on Iran aimed at keeping the critical Strait of Hormuz open to traffic, hours after President Trump declared that an interim agreement to end the war was “over.”

However, Mohammad Baqer Qalibaf, Iran’s top negotiator, on Sunday wrote on X that “the era of one-sided deals is OVER. We told you: keep your word or pay the price. Reality is knocking,” signalling that the war might just be gearing towards a more dangerous phase.

The latest closure of the Strait comes weeks after shipping traffic resumed around the Strait in late June following a ceasefire agreement between the US and Iran, with oil prices retreating to their pre-war levels, after a historic high of $118 per barrel.

The ceasefire brought relief to Nigerians as petrol prices fell to about N1,120 per litre, depending on retail location.

Shipping traffic was also seen returning to the Strait, although not yet at pre-war levels, but higher than they were during the thick of the war.

However, with recent fresh tensions in the Middle East, domestic petrol prices might edge up from their current prices, market observers warn.