Tensions in the strategically vital Strait of Hormuz escalated sharply on Tuesday after two vessels were reportedly seized by Iran’s Revolutionary Guard Corps (IRGC) and transferred to Iranian waters.
Oil prices edged lower in early Tuesday trading as markets pinned cautious hopes on a revival of US-Iran diplomacy, even as tensions around the Strait of Hormuz underscored the fragility of the situation ahead of the expiry of a two-week ceasefire.
Kuwait has declared force majeure on shipments of crude oil and refined products after a blockade of the Strait of Hormuz prevented some vessels from entering the Persian Gulf, hindering its ability to meet certain customer commitments, Bloomberg News reported.
Tensions have escalated again in the Strait of Hormuz as Iran said it was tightening control over it warning mariners that the energy lifeline was again closed, as shipping sources said at least two vessels came under fire while trying to transit the waterway. It said this was in response to a continued US blockade of Iranian ports.
A convoy of eight tankers - comprising one very large crude oil carrier (VLCC) and chemical tankers - was crossing the Strait of Hormuz on Saturday, data showed, as some ship owners said they hoped Tehran would allow them to leave the Gulf during a short ceasefire window in the Iran war.
Iran has announced that commercial shipping through the strategically vital Strait of Hormuz will remain fully open for the duration of the current ceasefire, signalling a potential easing of tensions in one of the world’s most critical energy corridors.
Fresh diplomatic signals from Tehran and Washington have raised cautious optimism about a potential deal to de-escalate tensions around the Strait of Hormuz and end the war.
Oil prices jumped above $100 a barrel again on Monday as the US Central Command said it will block ships from entering and exiting Iran ports via the Strait of Hormuz.
US President Donald Trump on Sunday announced that the US Navy would immediately begin blockading the Strait of Hormuz, sharply escalating tensions after marathon talks with Iran collapsed without a deal to end the war, leaving a fragile two-week ceasefire hanging in the balance.
Japan has instructed a national oil reserve storage site to prepare for a possible crude release after the Iran crisis disrupted Middle East supplies. Japan imports about 95 per cent of its crude from the region, much via the Strait of Hormuz.
