OIL prices extended gains yesterday, with Brent heading for a record monthly rise, after Yemeni Houthis widened the Iran war by launching their first attacks on Israel.
Brent futures rose to a high of $116.89 a barrel earlier in the session but pared gains later in the day to trade down 52 cents or 0.5% at $112.05. US West Texas Intermediate futures were up $2.2 or 2.2pc, at $101.83 after gaining 5.5pc in the previous session.
Brent has soared by about 58pc this month, the steepest monthly jump in LSEG data going back to 1988, exceeding gains made during the 1990 Gulf War. US crude, meanwhile, has climbed by 51pc for its biggest monthly gain since May 2020.
The gains were driven by Iran’s effective closure of the Strait of Hormuz, a chokepoint for about a fifth of global oil and gas supplies. The conflict, which began on February 28 with US and Israeli strikes on Iran, has since spread across the Middle East, stoking concerns over shipping routes around the Arabian Peninsula and the Red Sea.
Israel’s military said it intercepted two drones launched from Yemen on Monday, two days after Iran-aligned Houthis fired missiles at Israel for the first time since the start of the US-Israeli war on Iran.
“If the Houthis were to attack shipping and shut the southern entrance to the Red Sea, it would likely be a $5 to $10 event,” said Robert Yawger, director of energy futures at Mizuho.
Adding to price pressures, US President Donald Trump yesterday warned Iran to reopen the Strait of Hormuz or face US attacks on its oil wells and power plants.
“Great progress has been made, but if for any reason a deal is not shortly reached, which it probably will be, and if the Hormuz Strait is not immediately ‘Open for Business,’ we will conclude our lovely ‘stay’ in Iran by blowing up and completely obliterating all of their Electric Generating Plants, Oil Wells and Kharg Island,” Trump wrote in a social media post.
Iran’s top leaders, however, described US proposals as “unrealistic, illogical and excessive.”
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