Global oil prices rose Thursday as tensions between the United States and Iran increased. The jump came after Iran announced the Strait of Hormuz, one of the world's key oil shipping routes, would remain closed following fresh US military strikes.

Brent crude oil prices climbed to about $94.58 a barrel. US crude oil, or WTI, jumped to about $91.74 a barrel. The market moved sharply on worries that oil supplies might be disrupted for longer.

The Strait of Hormuz is a strategic artery linking the Persian Gulf to the world market. That’s the usual course for some 20% of the world’s oil and natural gas exports. Any interruption in traffic through the strait can have a major impact on global energy supplies and prices.

Iranian military leadership said commercial ships and oil tankers would be barred from passing through the waterway. The announcement has raised fears of future energy shortages and fuelled uncertainty in global markets.

Meanwhile the United States carried out further strikes against targets inside Iran. President Donald Trump warned Iran that if it refused a peace deal, more military action could follow. The developments have sparked fears of a further escalation of the conflict, despite a previous ceasefire agreement.

Energy analysts say the dispute is blocking a return to normal oil exports from the Gulf region. Traders therefore expect supply pressures to continue supporting higher oil prices.

US oil inventories have dropped too and are another factor driving prices higher. Official data indicated US crude inventories fell by 7.2 million barrels in the latest week, a much larger draw than analysts had forecast. Lower inventories are generally a sign of stronger demand or lower supplies, either of which can support higher prices.

At the same time, oil output from OPEC members has also stayed under pressure. Lower supply levels have been partly due to reduced exports from Iran, and partly due to disruption to other Gulf producers.

Global oil markets are likely to be volatile in the weeks ahead as geopolitical tensions remain high, and energy shipments continue to face challenges. Investors and policymakers around the world will be watching events in the region closely as any further escalation could have major implications for energy prices and the global economy.

 Credit: Independent News Pakistan (INP)