Energy markets are experiencing significant volatility following a standoff between the U.S. and Iran. The conflict, which includes the U.S. Navy seizing an Iranian ship and Tehran firing at vessels and reimposing controls in the Strait of Hormuz, has prevented tankers from passing through the critical waterway. These tensions, coupled with attacks on commercial ships and previous strikes by the U.S. and Israel on February 28, have left the two nations teetering on the brink of a renewed war.
Oil prices surged as a result of the disruption. U.S. crude oil increased 6.4% to $87.88 per barrel after trading resumed on the Chicago Mercantile Exchange. Brent crude, the international standard, climbed 6.5% to $96.25 per barrel, with some reports indicating it rose more than 7% or jumped as much as 7.9%. In other trading sessions, Brent crude futures advanced $5.08, or 5.62%, to $95.46 a barrel.
The instability extended to other markets, with European natural gas prices and futures rising amid fears that the flow of energy from the Persian Gulf will remain choked. While stock futures tumbled Sunday evening as traders digested the renewed tensions, Asian shares advanced on Monday morning.
Hopes for a near-term diplomatic resolution have been dented as Washington and Tehran offer conflicting accounts regarding ceasefire negotiations. Energy markets continue to see wild swings as the situation in the Strait of Hormuz remains unresolved.