Global oil prices hovered around $100 a barrel Friday after Iran rejected a U.S. cease-fire offer, fueling investor concerns that the widening conflict could throttle energy shipments from the region indefinitely.
Claims of strikes on tankers in the Red Sea by the Iranian-backed Houthi militia group on Thursday added to fears about the flow of oil out of the Middle East. The group has threatened to blockade Saudi ships taking an alternate route to avoid the Strait of Hormuz.
“From this point forth, any and all damages done to Ships, Cargo, or anything related thereto, will be paid for by Iranian Money that the United States has in its possession, and controls,” President Trump posted on his social media site late Thursday. “These damages may be very substantial but, nevertheless, this is the fair and equitable thing to do.”
Oil continued its rise.
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The price of Brent crude, the global benchmark for oil, was down 1 percent to trade at $99.62 a barrel. Earlier Friday, crude rose above $101, up nearly 40 percent since the start of the war.
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West Texas Intermediate crude, the U.S. benchmark, fell slightly to $90.82 a barrel — about $24 higher than before the conflict began.
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Investors and analysts are monitoring how many ships are passing through the Strait of Hormuz, the narrow waterway between Iran and Oman. They are also paying close attention to the Houthis’ threat to blockade the Bab al-Mandab Strait at the southern end of the Red Sea, which Saudi Arabia has used as an alternative route to export oil.
Stocks are down.
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Stocks in Asia fell on Friday following a sell-off in the U.S. markets over soaring oil prices, rising borrowing costs and worries about the technology industry. Japan’s Nikkei closed down 2.8 percent, and Hong Kong’s Hang Seng was down about 1.4 percent. South Korea’s Kospi market, which has experienced recent volatility in trading, closed down 5.7 percent.
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On Thursday, the S&P 500, a benchmark for the U.S. stock market, tumbled around 1.2 percent, while the tech-heavy Nasdaq Composite sank more than 2 percent. But futures on the S&P 500 were unchanged overnight, pointing to less volatility when stocks resume trading in the United States on Friday.
Gasoline prices have risen.
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Gas prices in the United States rose 3 cents on Thursday, to $4.09 a gallon, according to the AAA motor club. The national average price at the pump has risen 37 percent since the war began.
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Gas prices usually trail crude oil increases or drops by a few days. Many of the world’s refineries are offline or producing less after sustaining damage — including in the Persian Gulf and Russia — straining fuel markets.
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The average price of diesel rose to $5.21 a gallon on Thursday, up about 39 percent since the start of the war.
Shipping traffic remains low.
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Shipping traffic has slowed to a trickle since the Houthi threat. Only 15 ships passed through the Strait of Hormuz on Wednesday, according to Kpler, a maritime data firm. That was roughly in line with recent days, and well below prewar traffic levels of around 130 ships per day.
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In recent months, Saudi Arabia diverted millions of barrels of oil per day via the Bab al-Mandab Strait to avoid the Strait of Hormuz. Some ships are now moving north toward the Suez Canal, according to Kpler, but that route to Asia is costlier and logistically more complex.
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