SINGAPORE – Oil prices hit a new wartime high on April 30 following a report that the US military would brief President Donald Trump on potential action against Iran, after he signalled no letup in the naval blockade of the country.
Brent crude, the global oil benchmark, surged 6.1 per cent to US$125.18 a barrel as at 12.10pm Singapore time, after jumping more than 6 per cent to the highest level since June 2022 on April 29. The US benchmark, West Texas Intermediate, rose 2.4 per cent to US$109.47.
Mr Trump told Axios he will not lift a naval blockade until he secures a nuclear deal with Iran, while the news site separately reported that US Central Command will brief the president on April 30 on potential military plans.
The US is expanding its pressure on Tehran by seeking the forfeiture of two Iran-linked oil tankers that were seized by naval forces enforcing the blockade, as American authorities try to squeeze buyers of Iranian crude. The US military has also asked for hypersonic missiles to be sent to the Middle East, which would mark the first time the country deployed those weapons.
The Strait of Hormuz has been effectively closed since the war started at the end of February, choking off flows of crude, natural gas and oil products, and driving up energy prices. On April 28, Mr Trump discussed steps the US could take to prolong its blockade while minimising the impact on American consumers at a meeting with oil and trading executives, the White House said.
Iranian officials remain defiant. Mohsen Rezaee, military adviser to the Supreme Leader, vowed the nation will respond if the US blockade continues, according to state TV. Parliament Speaker Mohammad Bagher Ghalibaf accused Mr Trump of seeking to force Tehran to surrender through economic pressure and internal divisions, Tasnim news agency reported.
“Trump has ripped away the security blanket the market was clinging to – the hope that the war was about to end,” said Robert Rennie, head of commodity research at Westpac Banking. “Traders are now being forced to confront a much uglier reality: both sides still think they are winning, neither side has a clear incentive to negotiate, and energy prices are starting to accelerate higher.”
Blockades of the Strait of Hormuz by the US and Iran has reduced daily transits to near zero. The International Energy Agency called the conflict in the Middle East the biggest supply shock in history, and Vitol Group says the market is facing a supply loss of around one billion barrels.
The US has turned away dozens of ships since the start of its blockade on April 13. Confiscating oil cargoes aboard Iran-linked tankers would represent an escalation of Trump’s economic offensive – and dovetail with Washington’s strategy toward Venezuelan crude after the ouster of President Nicolás Maduro.
The Trump administration is now asking other countries to join an international coalition that would enable ships to navigate the Strait of Hormuz, according to a report from the Wall Street Journal, which cited an internal State Department cable sent to US embassies on Tuesday.
US crude exports surged to a record last week as global buyers tapped American producers for barrels to replace lost supply from the Middle East. Overseas shipments rose above 6 million barrels a day, eclipsing a previous high of nearly 5.3 million set in late 2023.
“It feels like a day of reckoning,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, referring to the price gains on April 29. “The paper market is catching up to the physical, which has already started to reflect tighter balances and delayed flows.” BLOOMBERG
