Crude oil boiled due to US-Iran war: Crude rose 6% from yesterday’s low after threat to close the Strait of Hormuz.

The direct and deep impact of the increasing military tension between America and Iran in West Asia (Middle East) is now visible on the lifeline of the global economy i.e. Crude Oil. Amidst the ongoing air strikes and shelling between the two countries in the Gulf region, there has been a sudden sharp rise in the prices of crude oil in the international market. Crude oil has jumped by about 6 percent from its previous session’s low. The main reason for this huge rise is the new attack on Iranian military bases by the US on Thursday and in response to that, Iran’s official announcement of closing the world’s most sensitive energy chokepoint, ‘Strait of Hormuz’. However, despite this sudden rise in the market, crude still remains around the psychological level of $95. The latest situation of Brent and WTI crude is seeing good gains in both the global benchmarks after Iran’s Top Joint Military Command warned of complete closure of the Strait of Hormuz for oil tankers and commercial ships. Iran has clearly said that military action will be taken against any ship trying to pass through this route. The latest position of both the major crude oils in the international market can be seen in the table given below: Note: The US benchmark WTI had risen above $3 at one point during the trading session. Strait of Hormuz: Why is the world’s eyes fixed on this route? From a geographical and trade point of view, the Strait of Hormuz is considered the world’s most important energy gateway. 20% of supplies pass through this route: Nearly one-fifth (20%) of all oil and gas shipments around the world typically pass through this narrow waterway. Trade was already disrupted: Global trade flow was already affected due to various restrictions imposed by Iran on this sea route in recent months, due to which crude oil prices remained at a high level. ?? US military claims Despite Iran stopping ships and threatening military action, the US military has shared a post on social media platform X describing the situation as different. The US military claims that commercial ships are still passing through the Strait of Hormuz normally. Along with this, America has also completely rejected the reports in which it was being said that there was an attack from Iran on the US Navy ships operating in the Gulf waters. Oil stocks in America reduced amid geopolitical tension. Crude oil prices are not only getting support from this war, but the low supply of oil in America has also added fuel to the fire. The latest data released by the US Energy Information Administration (EIA) has surprised even the market experts: A huge decline of 7.2 million barrels: A huge decline of 7.2 million barrels has been recorded in America’s crude inventory (crude oil stocks) in the week ending June 5. Reduction twice as expected: Market analysts and experts were predicting a decline of only 4 million barrels, but the actual reduction was much more than expected. Stock has also reduced significantly in ‘Cushing’, a major delivery hub in Oklahoma. New threat of inflation and economic recession US crude stocks (which include their strategic reserve) have declined sharply since the direct conflict between the US and Iran began earlier this year. Due to reduced flow of oil from the Persian Gulf, America had significantly increased its exports to overcome the supply shortage in the global market. Although some oil cargoes are still somehow managing to leave the troubled region, overall global shipments of oil are running well below normal levels before the war began. Due to this blockage, energy and fuel prices are increasing rapidly around the world, which has once again increased the concerns of major countries and policy makers of the world regarding global inflation and slowing economic growth rate.