People gather on a beach near Bandar Abbas, Iran, on May 31, with vessels passing through the Strait of Hormuz visible in the background. [Reuters]
People gather on a beach near Bandar Abbas, Iran, on May 31, with vessels passing through the Strait of Hormuz visible in the background. [Reuters]

Global oil prices surged roughly 3 percent Thursday after Iran moved to restrict US and Israeli shipping through the Strait of Hormuz and Yemen's Houthi rebels resumed attacks, stoking fears of supply disruptions along the Middle East's two main crude transit routes.

Brent crude futures for October delivery settled up 3.8 percent at $82.49 a barrel on the ICE Futures Exchange on Thursday, while West Texas Intermediate futures for September delivery rose 2.8 percent to close at $77.29 a barrel on the New York Mercantile Exchange.

The rally was driven primarily by rising tensions over the Strait of Hormuz.

Iran's semi-official Fars News Agency reported Thursday that the country's parliamentary national security committee is reviewing a bill that would ban vessels from the United States, Israel and other hostile nations from transiting the strait.

The draft is currently undergoing expert review, and parliament is gathering input to refine the legislation.

The Strait of Hormuz handles roughly 20 percent of global maritime oil shipments. Markets fear that any selective transit restrictions by Iran would sharply increase uncertainty across the oil supply chain.

Concerns about stalled US-Iran negotiations also added upward pressure on prices.

"The crude market is still closely watching for progress in negotiations between the United States and Iran," said Dennis Kistler, senior vice president at BOK Financial. "The longer the talks are delayed, the more likely oil prices are to resume their climb."

Geopolitical risk in the Red Sea also returned to the fore.

Houthi rebels launched missile strikes Thursday against Yemeni government military bases in Marib and Hadramawt provinces. Local sources said the attacks killed at least 38 government troops and wounded dozens more.

The Houthis declared an end to a truce last month after blaming Saudi Arabia for airstrikes on Sanaa International Airport, and have since continued targeting Saudi vessels in the Red Sea.

"Middle East tensions keep swinging between de-escalation and flare-ups, and oil prices are moving sharply in response," said John Kilduff, partner at Again Capital. "The latest Houthi attack served as a reminder to the market that the Red Sea shipping lane still faces significant risk."


sjy@heraldcorp.com