Oil prices continued to climb on Tuesday, hitting their highest levels in a month, as an escalating pattern of strikes and counter strikes between the United States and Iran rattled markets.
Brent crude, the international benchmark, breached $85 per barrel for the first time in a month. Analysts at the Eurasia Group said that ship traffic in the Strait of Hormuz was likely to fall from 30 to 50 percent of prewar flows before the latest burst of fighting to only 5 to 15 percent of prewar levels. As a result, they expect oil to trade at a price of up to $95 a barrel because of the disruptions.
Oil price rises amid clashes.
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The price of Brent crude, the global benchmark for oil, was up 3 percent to around $86 a barrel on Tuesday. It settled 9 percent higher on Monday, surging after Mr. Trump’s comments on reinstating the blockade.
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The recent surge has pushed the cost of Brent crude 17 percent above its prewar price. Also pushing up prices was President Trump’s plan to reinstate a U.S. naval blockade of Iranian ports on Tuesday.
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West Texas Intermediate crude, the U.S. benchmark, rose to $80 a barrel.
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China’s imports of crude oil fell more than 40 percent in June versus the same time the previous year, the Chinese government reported on Tuesday, to the lowest level in a decade. As the world’s largest importer of oil, how much China buys can influence the global oil market. Beijing has slashed purchases in recent months, helping keep downward pressure on global prices.
Stocks in Europe decline, with U.S. futures steady.
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Futures on the S&P 500 were little changed, pointing to a flat open when stocks resume trading in the United States on Tuesday, ahead of the release of new U.S. consumer price and inflation data. The index closed down about 0.8 percent on Monday.
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Stocks in Asia, where countries import vast quantities of oil and gas, were mostly higher, with Japan’s Nikkei 225 and South Korea’s benchmark KOPSI both up about 0.7 percent.
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In Europe, stocks were trading lower. The Stoxx 600, a broad-index that tracks the region’s largest companies, was down about 0.7 percent.
Gasoline prices remain high.
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Gas prices stayed elevated on Tuesday, with a national average of $3.86 a gallon, up from $3.79 a week ago, according to the AAA motor club. The increase has raised the cost for drivers by nearly 30 percent since the war began.
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Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.
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The average price of diesel ticked higher on Tuesday to $4.88.
What they are saying: The cease-fire looks ‘well and truly dead.’
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“The return of the U.S. blockade is much more impactful for markets than the previous suspension of the sanction waiver on Iranian oil,” Warren Patterson and Ewa Manthey wrote in a report for the bank ING.
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The truce deal reached between the United States and Iran last month, they wrote, “is starting to look well and truly dead.”
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