Oil prices surged nearly 3 per cent on Thursday, extending a five-day rally as the expiry of a US-Iran memorandum of understanding and renewed pressure from Washington raised fears of further supply disruptions.
Brent crude, the global benchmark, rose 2.56 per cent to about $94 a barrel by 3.56pm UAE time, while West Texas Intermediate gained 2.57 per cent to $88.40.
Prices climbed after US President Donald Trump announced measures to intensify economic pressure on Iran and curb its oil exports, describing the campaign as “economic warfare and isolation on an unprecedented scale”.
A 60-day interim agreement between the US and Iran to reopen the Strait of Hormuz expired on Sunday, with Mr Trump indicating there were no plans to renew it. The strait, through which about a fifth of global oil and gas supplies passed before the war, remains effectively blockaded, with traffic well below pre-war levels.
Traffic through the Strait of Hormuz fell into single digits before recovering to 12 commodity vessels on August 19, in line with the 10-day moving average, according to Kpler data.
“Tensions in the Middle East remain high, leaving room for further supply disruptions,” said UBS analyst Giovanni Staunovo. “Lower oil exports from the Middle East are once again tightening the oil market.”
Iranian oil exports through the strait have plunged by as much as 97 per cent from their post-MoU peak as the agreement unravelled and the US reimposed its blockade on Iranian ports.
Volumes fell to just 46,800 bpd in the week of August 10, the most recent available data, from 1.545 million bpd in the week of June 29, according to Kpler.
Iran's central bank chief Abdolnaser Hemmati said on Thursday that the Opec producer was not exporting any oil.
“There is no doubt that we have restrictions on oil exports,” Mr Hemmati said on state television. He added: "It is a reality that we are not exporting oil.”
