Oil prices climbed on Tuesday after Trump countered Iran’s terms to reopen the Strait of Hormuz by demanding compensation for casualties from past wars, attacks, and protests, marking a sharp escalation that threatens efforts to unblock the critical shipping lane. The surge came as oil held on a four-day advance as doubts over the prospects of Hormuz persisted.
Brent crude futures edged up to $88 per barrel, while US crude futures rose to $82.45, the highest levels for both benchmarks since July 31, following a 5 percent surge on Monday.
Trump rejecting Iran’s compensation demands said on Monday, Iran would have to compensate the US for people it has killed in conflicts, adding that the demand would be put “firmly into any, and all, future negotiations.”
The conflict has impacted the fuel market significantly. Oil refinery operations and diesel supplies are disrupted, while the Russia-Ukraine conflict continues to add pressure to energy infrastructure. European diesel futures jumped 9% on Monday, marking their biggest gain since early July. Shipping risks across Red Sea which served as an alternative for Saudi Arabia to ship oil is also being threatened. Iran-backed Houthi militants have threatened vessels and energy infrastructure. In response Saudi Aramco has pushed back the restart of its Jazan refinery to late August following an attack claimed by the group, according to IIR Energy.
With the uncertainties prevailing petrol and diesel prices in India may come under pressure. India which exports a large share of its crude oil has since been reeling under the Middle East conflict.