Oil prices surge 10% as Iran threatens to 'set fire' to ships passing through Strait of Hormuz

Oil prices have surged for the 3rd day straight, as the US-Israel offensive on Iran has widened. One of the biggest threats of any conflict involving Iran was the spillover of the tension on the shipping route, the Strait of Hormuz, which carries one-fifth of the global oil supply.

“The price of oil has reached $81/bbl, and the world is certainly waiting for it to reach at least $200. The Strait of Hormuz is closed. Our heroes in the Islamic Revolutionary Guard Corps Navy and the Army will set fire to any ships that wish to pass through this strait,” said the IRGC adviser General Ebrahim Jabari on state TV.

The cumulative jump in crude oil prices was by at least 10 per cent following the US-Israel attacks on the Islamic Republic. On Tuesday, Brent future is trading at $79.85 per barrel, up by 2.78 per cent, WTI future is trading at $73.15 per barrel, up by 2.70 per cent, Murban future is trading at $80.41 per barrel, up by 2.37 per cent from Monday. Brent briefly touched $82.37 per barrel on Monday, then retreated before the market closed. The Spot prices have also seen a cumulative jump of 10 per cent since the pre-conflict period, with Brent at $77.82 per barrel for Brent, WTI spot at $70.90 per barrel, and Murban spot at around $79 per barrel. The surge in oil prices was apparent in US gas stations as the US had an average price of gasoline that topped $3 per gallon for the first time since November. Gasoline is being sold at $3.052 per gallon, up by 11.1 cents, and Diesel is being sold at $3.812 per gallon.

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The US Secretary of State Marco Rubio has said on Monday that they have a phased plan in place to tackle the spike in oil prices. “ We anticipated this could be an issue. And Secretary Wright and Bessent will begin to roll out those steps starting tomorrow to mitigate – to mitigate – against the impact that could have,” said Marco Rubio, referring to Energy Secretary Chris Wright and Treasury Secretary Scott Bessent.

However, analysts predict a further surge in the volatility, as there is no proper plan in place for de-escalation in the region. The Strait of Hormuz remains technically open but functionally closed. “Traffic is down at least 80 per cent,” said Michelle Bockmann, a senior maritime intelligence analyst at Windward. Most commercial operators have withdrawn from the site, and insuarance premium have reached six years high. This could impact the Gulf countries and specifically South East Asian countries, China, India, Japan, South Korea and Europe. As some 30 per cent of Europe’s supply of jet fuel passes through the lane. The US seems immune at the beginning with the rising cost, as it likely helps the US Producers. Ships are compelled to reroute, and longer routes cost more in transport and insurance. A prolonged conflict might encourage South Asian countries to look at other producers in Russia. However, market analysts predict that Iran's attack on the shipping route might just work against them, as it will draw the Gulf nations into the war and might make “boots on the ground” feasible for the US.

(Disclaimer: WION takes utmost care to accurately and responsibly report ongoing conflicts in West Asia involving Israel, Iran, the US, Gulf nations and non-state actors like Hezbollah, Hamas, Houthis, Islamic State, and others. Claims and counterclaims, disinformation and misinformation are being made online and offline. Given this context, WION cannot independently verify the authenticity of all statements, social media posts, photos and videos.)