Brent crude jumped more than $5 a barrel to above $105 after a surge in attacks on tankers in the Strait of Hormuz, and Iran has warned it will block any new shipping routes opened around the chokepoint. The escalation is also pushing up shipping surcharges and government bond yields.
Brent crude oil jumped more than $5 a barrel on Thursday, taking it above $105 a barrel, after a wave of attacks on tankers moving through the Strait of Hormuz. Brent was trading at $105.26 a barrel, up 5.15% on the day.
Iran warns against new shipping routes
Tankers face a higher risk of attack and intimidation as they try to move through the strait, after Iran warned regional countries that opening new, unauthorized export routes would be treated as a hostile act, a senior regional official close to Tehran said. The warning was agreed by both Iran's political leadership and its Revolutionary Guards, the official said.
Last week brought the highest number of tanker attacks in the waterway since the Iran war began, cutting the number of vessels attempting the passage to its lowest in more than two months. In the latest incident, projectiles struck the Antigua and Barbuda-flagged chemical tanker Acers 51 nautical miles off the coast of Qatar, causing minor crew injuries. According to Investing.com, Major General Paul Maynard of Britain's Royal Navy warned: "A war at sea does not remain at sea."
Bond markets and shipping costs feel the strain
The surge is rippling beyond energy markets. Danish shipping group Maersk said it was raising its emergency fuel surcharge on inland transport in the UK and Ireland because of the conflict. Separately, industry executives said at a London forum that oil in storage accessible to the global market is running low, adding to the market's fragility.
The jump in crude also pushed UK government bond yields sharply higher. The benchmark 10-year gilt yield rose 6 basis points to 5.515%, its highest since July 2007. The 20-year gilt yield reached 6% for the first time since March 1998. The 30-year yield climbed to a new peak of 6.047%, the highest since January 1998.
Daniela Hathorn, senior market analyst at Capital.com, said the renewed attacks on shipping are rebuilding part of the geopolitical premium in Brent that had faded as US-Iran negotiations showed signs of progress.
Sources: The Guardian, Investing.com
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