Oil prices surge on Iran Hormuz threat

Global oil prices surged after Iran signaled it intends to continue blocking the Strait of Hormuz, a vital route for global crude shipments, following the outbreak of war involving the United States, Israel and Iran. The spike came after statements from Iran’s new supreme leader Mojtaba Khamenei and Ali Larijani, secretary of the Supreme National Security Council, who emphasized a prolonged blockade and a resolve to fight the United States to the end.

On March 12, Brent crude futures for May delivery settled at $100.46 per barrel on the Intercontinental Exchange in London, rising 9.2 percent from the previous session. It marked the first time the global benchmark has closed above $100 per barrel since August 2022, about three years and seven months ago. On the same day, West Texas Intermediate crude futures on the New York Mercantile Exchange climbed 9.7 percent to settle at $95.73 per barrel.

Mojtaba Khamenei, who assumed the role of supreme leader on March 8, warned in his first statement on March 12 that Iran must continue using the “leverage” of closing the Strait of Hormuz. Larijani echoed that position the same day in a post on X, saying Iran would “never retreat” until the United States deeply regrets what he described as the grave miscalculation of attacking Iran.

Australia’s Macquarie Group forecast that global oil prices could climb above $150 per barrel if the blockade of the Strait of Hormuz persists for several weeks. The International Energy Agency also warned that the war is creating what could become the largest supply disruption in the history of the global oil market.

Facing a sharp rise in oil prices, the U.S. Treasury Department on March 12 temporarily lifted sanctions on Russian crude oil and related petroleum products for one month through April 11. The sanctions had been imposed after Russia’s invasion of Ukraine in February 2022. U.S. President Donald Trump, however, wrote on Truth Social on March 13 that the United States is “completely destroying Iran militarily, economically and in every other way,” adding, “Watch what happens today.”


Jin-Woo Shin niceshin@donga.com