WASHINGTON (dpa-AFX) - Reversing the dip from Friday's session, crude oil prices have surged on Tuesday as expectations over the Strait of Hormuz reopening faded as U.S. forces and Iran continue to trade attacks.
Of note, markets remained closed on Monday on account of Labor Day.
WTI Crude Oil for October delivery was last seen trading up by $1.31 (or 1.43%) at $92.79 per barrel.
In the Middle East, while the U.S. continues to tighten its naval blockade on Iranian ports, Iran is attempting to seal off the Strait of Hormuz.
On Saturday, Iran launched several ballistic missiles at a U.S. aircraft carrier and a destroyer involved in the naval blockade. U.S. forces evaded the missile attacks.
On Sunday, United States Central Command claimed that it struck three tankers linked to Iran, permanently disabling them.
The three crude oil carriers controlled by the Islamic Revolutionary Guards Corps were M/T Downy, M/T Stark 1, and M/T Mylo (or Noxen). The strikes against these vessels were conducted off the coast of Kharg Island, near Jask, and in the Gulf of Oman respectively.
CENTCOM Commander Admiral Brad Cooper warned that if Iran shoots two U.S. ships, U.S. forces will take out three to impose higher economic costs.
On Monday, CENTCOM claimed that U.S. forces have redirected around 94 vessels since the announcement of the U.S. naval blockade on Iranian ports.
Today, Iran's state media reported that the nation had unveiled an improved ballistic missile capability.
The head of Iran's Supreme National Security Council Mohzen Rezaei claimed that the upgraded capability was tested against a U.S. warship and warned the U.S. that Iran has fundamentally recalibrated its posture toward U.S. warships and bases.
Announcing that Iran is preparing to establish a maritime exclusion zone across the Persian Gulf, Rezaei threatened that any ship entering the new restricted maritime area outside the Strait of Hormuz will be placed on the sanctions list.
Yesterday, Iran's Parliament Speaker Mohammad Bagher Ghalibaf announced that in the likelihood of an attack by the U.S., Iran would hit back on energy infrastructure across the gulf, including U.S. oil and gas interests.
U.S. President Donald Trump messaged through Truth Social that when the U.S. wins the war with Iran, gasoline prices in the U.S. will drop to below-two-dollars per gallon, which he predicted will happen quickly.
The Strait of Hormuz remains closed for the seventh month.
Terming that a 'no war, no peace' situation in the gulf is unacceptable, Qatar urged both nations to return to dialogue process.
Citing Kpler, Reuters reported that the number of commodity vessels transiting the Strait of Hormuz were seven on Monday, down one from eight of the previous day. The 10-day moving average was 10 on Sunday, down from more than 15 on Friday and nearly 13 on Saturday.
Following six straight monthly increases, on Sunday, the key members of the Organization of the Petroleum Exporting Countries along with their allies agreed to hold their oil production steady in October.
The blockade to Arabian oil flow has limited their ability to transport any additional inventory to the consumer. The decision by OPEC+ capped the gains for crude oil prices.
On Sunday, in an interview with ABC News, U.S. Energy Secretary Chris Wright remarked that the U.S. may not be able to reach an agreement with Iran on its nuclear programs.
Later in an interview with CNN, Wright declined to call the Strait of Hormuz safe for oil tankers unless the U.S. Navy escorts them.
In another interview with CBS News, he also mentioned that the U.S. was always open for a deal and is not shutting down diplomatic outreach.
Elsewhere in the Middle East, the fighting between Iran-backed Houthi rebels in Yemen and Saudi Arabia-backed Yemen forces intensified over the weekend.
Today, Houthis launched dozens of ballistic missiles and drones towards Saudi Arabia, targeting Aramco's facilities in Abha, Najran, and Jazan as well as the King Khalid Air Base in Khamis Mushait.
In the U.S., following last Friday's strong jobs data, expectations for a possible interest rate hike by the U.S. Federal Reserve have increased. Traders are now anticipating this week's inflation data to gather more insights.
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