Oil Rises $2 As Iran Announces Closure of Strait of Hormuz Following US Strikes

New Delhi: Oil prices ‌climbed more than $2 a barrel Thursday as Iran declared the critical energy chokepoint, the Strait of Hormuz, closed after the U.S. launched additional strikes against Iran.

Brent futures rose $2.30, or ​2.47%, to $95.40 a barrel, while U.S. West Texas Intermediate (WTI) crude climbed $2.60, ​or 2.89%, to $92.63. U.S. crude futures gained more than $3 earlier in ⁠the session.

Iran's top joint military command announced the closure of the Strait of ​Hormuz on Thursday, including oil tankers and commercial ships, saying any vessel that ​will attempt passage will be shot at.

However, the U.S. military said on X on Wednesday that commercial ships continue to transit in and out of the strait.

It also said no U.S. warships ​have been struck in the strait, after Iran's state media reported U.S. ships ​near the waterway were targeted by missiles and drones.

U.S. forces began launching additional strikes against multiple ‌targets ⁠in Iran at 5:15 p.m. EDT (21:15 GMT), the latest in an escalating exchange of attacks that threaten to reignite a full-scale war, which was paused in early April when the two sides agreed to a fragile ceasefire.

Iran's months-long ​blockade of the strait, ​which normally carries ⁠a fifth of the global oil and gas shipments, have kept oil prices elevated.

Meanwhile, U.S. crude inventories fell by 7.2 ​million barrels to 426.5 million barrels in the week ​ended June ⁠5, the EIA said on Wednesday, compared with analysts' expectations in a Reuters poll for a 4 million-barrel draw.

U.S. crude inventories, including those from strategic reserves, ⁠have ​fallen by 79 million barrels since the Iran ​war began on February 28, as the world's largest producer stepped into fill supply gaps left ​by the effective closure of the strait.

Asian stocks fell on Thursday, weighed down by a Wall Street selloff after a hotter-than-expected U.S. inflation reading, while renewed U.S. strikes on Iran fuelled a rise in oil prices.

MSCI's broadest index of ​Asia-Pacific shares outside Japan, opens new tab was down 0.9%, led by a 3% drop in South Korea's ‌KOSPI, opens new tab. S&P 500 e-mini futures were 0.3% lower.

Strategists believe that Asian stocks that had rallied hardest ⁠during the past two months are likely to extend recent losses, as markets question whether the sky-high expectations ​for earnings growth that had driven the gains can be maintained.

"Given already stretched valuations, these extreme bullish expectations ​set a vulnerable backdrop for momentum in Korea, Taiwan and the Asia tech sector," said Rupal Agarwal, Asia quant strategist at Bernstein in Singapore, in a note to clients.

Trimming positions in these stocks would be "most prudent," she added, noting that "the re-escalation ​on the war front could further accelerate this unwind."

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