Oil prices continued to rise on Monday, remaining above $100 a barrel on supply concerns, even as US President Donald Trump said the US was seeking to create a coalition of allies to reopen the Strait of Hormuz.
Brent, the benchmark for two-thirds of the world's oil, was up 1.29 per cent at $104.47 a barrel at 8.12am UAE time on Monday. West Texas Intermediate, the gauge that tracks US crude, was trading 0.56 per cent higher at $99.26 per barrel. Both benchmarks recorded a fourth consecutive weekly gain last week.
Crude prices, which touched nearly $120 a barrel last Monday, remain high as the Strait of Hormuz, the transit route for about a fifth of the world's oil, remains effectively shut following the US and Israel war on Iran, which began on February 28.
With pressure building on the Trump administration over rising energy prices, the US is calling on allies to help secure the strait.
The US is talking to seven countries about patrolling the strait to protect shipping, Mr Trump said, claiming that Washington has been “maintaining” the waterway “for years”.
He did not say which countries Washington had been in contact with, but in an earlier post on social media, he said he was hoping for participation from France, Japan, South Korea, Britain and China, among others.
The Wall Street Journal earlier reported that the White House would soon announce a coalition of countries willing to escort ships through the strait.
Mr Trump also said Nato faces a “very bad future” if member countries do not help the US in the war on Iran, particularly with regard to the strait.
“It’s only appropriate that people who are the beneficiaries of the Strait will help to make sure that nothing bad happens there,” he told the Financial Times.
Japanese Prime Minister Sanae Takaichi on Monday confirmed that Japan does not have plans to send naval vessels to the strait.
“We have not made any decisions whatsoever about dispatching escort ships,” Ms Takaichi told parliament. “We are continuing to examine what Japan can do independently and what can be done within the legal framework.”
Officials from the UK and South Korea said they are looking into the matter.
Separately, Mr Trump is also weighing a seizure of Iran's oil depot on Kharg Island, Axios reported. Tehran has said it will retaliate for any attacks on its energy infrastructure.
US Energy Secretary Chris Wright said on Sunday that he expects the war with Iran to end in the “next few weeks”, with energy costs set to drop after that.
Meanwhile, oil from emergency reserves will soon start flowing to global markets, the International Energy Agency (IEA) said on Sunday.
That comes after IEA member countries said last week that they will release 400 million barrels of oil from their emergency reserves following supply disruptions due to the Iran conflict.
Stocks will be made available by IEA member countries in Asia Oceania “immediately”, while stocks from the Americas and Europe will be released starting from the end of March, the IEA said.
“The war in the Middle East is creating the largest supply disruption in the history of the global oil market. This emergency collective action, by far the largest ever, provides a significant and welcome buffer,” it said.
However, it stressed that the resumption of regular transit of shipping through the Strait of Hormuz remains key to ensuring market stability.
“Adequate insurance mechanisms and physical protection for shipping are key to the resumption of flows,” it added.
