Oil nears $80 after Trump declares Iran ceasefire over

Global oil prices surged towards $80 per barrel on Wednesday after Donald Trump, the President of the United States, declared that the ceasefire with Iran had collapsed, reigniting fears of supply disruptions in the Middle East and threatening crude shipments through the Strait of Hormuz.

International benchmark Brent crude rose by about six per cent to trade at $78.58 per barrel, while US benchmark West Texas Intermediate (WTI) climbed to $74.76 per barrel, as traders priced in the risk of a broader regional conflict and potential disruption to one of the world’s busiest energy corridors.

The rally followed fresh military exchanges between Washington and Tehran overnight, with the US launching new strikes on Iranian targets and Iran retaliating against American military interests in the Gulf.

The renewed hostilities have heightened concerns over the collapse of diplomatic efforts to end the conflict and restore stability to the Strait of Hormuz, a strategic shipping lane through which around one-fifth of global oil and liquefied natural gas supplies pass.

Despite the escalation, tanker movements through the Strait continued on Wednesday, although shipping traffic remained significantly below normal levels as operators reassessed security risks in the region.

According to tanker-tracking data, six vessels were observed either entering or exiting the Strait hours after Iran attacked three commercial ships near the Omani coast on Tuesday.

Among the vessels to complete the passage was a very large crude carrier chartered by ExxonMobil and carrying about two million barrels of crude oil. The supertanker successfully navigated the Strait overnight despite the deteriorating security environment.

Shipping data showed that the vessel transited through a corridor over which Iran claims authority, highlighting the increasingly complex operational environment facing tanker operators in the region.

However, several other vessels adopted a more cautious approach, with some making U-turns or anchoring east and west of the Strait while awaiting further guidance on maritime security and the trajectory of the conflict.

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The latest developments have created difficult choices for shipowners over which route to take through the narrow waterway.

The northern shipping channel, located closer to Iranian territorial waters, is widely believed to require tacit approval from Iranian authorities, while the southern corridor along the Omani coastline is generally considered to be under the protection of US naval forces.

Ironically, it was along the southern route near Oman that Iran reportedly struck three commercial vessels on Tuesday, raising fresh questions over the safety of both transit corridors.

Two of the vessels targeted were carrying energy cargoes, including a Qatari liquefied natural gas carrier registered in the Marshall Islands and a Saudi-owned ultra-large crude carrier, both of which were reportedly operating without active tracking signals at the time of the attacks.

Following the incidents, the Joint Maritime Information Center raised the security threat level for the Strait of Hormuz to “severe”, warning that deliberate hostile actions were now considered likely under prevailing conditions.

The UK Maritime Trade Operations (UKMTO) also issued an advisory urging vessels operating in the region to exercise extreme caution.

“Iranian attacks have raised the threat level to severe, with deliberate hostile action likely under current conditions,” UKMTO said, adding that the recent incidents underscored the need for heightened vigilance by commercial shipping operators.

The agency further warned that pressure from Iran’s Revolutionary Guard Corps on vessels transmitting Automatic Identification System (AIS) signals remained elevated, increasing navigational and operational risks for ships operating in the Gulf.

Market analysts said investors are closely monitoring developments in the Strait of Hormuz, where any prolonged disruption to shipping could significantly tighten global crude supplies and push oil prices closer to the $80 per barrel mark and beyond.

According to Andreas Krieg, a security expert at King’s College London, Iran remains committed to its position that vessels using the Strait should be subject to transit fees, a proposal strongly opposed by Washington.

“We are now in a sensitive period where potential alternatives to an Iranian toll or fee system are being explored,” Krieg said.

He added that Tehran was sending a clear message that it would not accept arrangements that bypass its influence over the strategically important waterway.