Oil prices rose on Tuesday after the US bombed Iran for a third straight day and the Islamic Revolutionary Guard Corps attacked at least two oil tankers transiting the Strait of Hormuz.
West Texas Intermediate futures rose 3% to $80.55 a barrel by 8:47 a.m. ET. brent Futures, an international benchmark, rose 4.3% to $86.85.
U.S. forces bombed military targets off Iran’s coast Monday night in an effort to reduce Iran’s ability to attack commercial shipping, according to U.S. Central Command.
Iran’s Revolutionary Guards said it attacked two supertankers sailing through Hormuz with their transponders turned off. The UAE’s state-run oil company ADNOC said one crew member was killed and several others were injured when two of its tankers were hit by a projectile while passing through the strait.
Centcom said in a statement that based on President Donald Trump’s order, the U.S. Navy will reimpose a blockade of Iranian shipping at 4 p.m. ET.
President Trump said on Monday that the U.S. military would keep the port of Hormuz open, but demanded payment equal to 20% of the value of all cargo shipped through the strait.
Citi warned that President Trump’s proposal to impose shipping fees on the Strait of Hormuz substantially increases the risk of further military escalation.
“It is also increasingly likely that the Iranian regime will withdraw from the memorandum until after the US midterm elections, a scenario that is most likely to rise further if oil prices persist,” the bank said in a report published early Tuesday.
Before the United States and Israel launched their attack on Iran on February 28, approximately one-fifth of the world’s oil supplies passed through the Strait of Hormuz. Shipping traffic had slumped since Iran began targeting ships in the waterway in early March, but had begun to pick up following an interim agreement between the United States and Iran.
