APA Corporation’s Beryl Alpha oil platform in the North Sea.
Provided by: APA Co., Ltd.
Oil prices rose on Tuesday after US President Donald Trump announced plans to impose shipping fees on the Strait of Hormuz and reopen a blockade of Iranian ports, raising concerns about potential disruptions to global oil supplies.
U.S. West Texas Intermediate futures for August delivery rose 2% to $79.78 a barrel. International benchmark Brent crude oil futures for September delivery rose 1.85% to $84.84, extending gains after rising 9.6% in the previous session.
President Trump on Monday said the United States would impose a fee of “20% of all cargo transported” on ships passing through the Strait of Hormuz, after saying the United States was the “guardian” of the critical oil shipping route.
President Trump also announced in a post on Truth Social that the United States would reinstate a blockade of Iranian ports near the Straits, further escalating the conflict with Iran. Later, U.S. Central Command announced that the blockade would go into effect at 4 p.m. ET on Tuesday.
Citi warned that President Trump’s proposal to impose shipping fees on the Strait of Hormuz substantially increases the risk of further military escalation.
“It is also increasingly likely that the Iranian regime will withdraw from the memorandum until after the US midterm elections, a scenario that is most likely to rise further if oil prices persist,” the bank said in a report published early Tuesday.
Before the United States and Israel launched their attack on Iran on February 28, approximately one-fifth of the world’s oil supplies passed through the Strait of Hormuz. Shipping traffic had slumped since Iran began targeting ships in the waterway in early March, but had begun to pick up following an interim agreement between the United States and Iran.
