Photo caption: Oil pump jacks
*Iran closes Strait of Hormuz, threatens to fire on vessels attempting passage
*Talks intensifying to reach deal, Iranian sources say
*Trump says US will hit Iran ‘very hard’
Oil prices were nearly flat on Thursday as investors weighed the impact of supply disruptions from the war in the Middle East after President Donald Trump warned that the U.S. military would hit Iran “very hard tonight.”
Hostilities between the U.S. and Iran have recently escalated. Trump said the U.S. will soon take control of Iran’s oil and gas infrastructure and markets while Washington launched additional strikes against the country. Meanwhile, Tehran declared the Strait of Hormuz closed.
Reuters reported that Brent futures were down 12 cents, or 0.1%, to $92.98 a barrel by 1303 GMT, while U.S. West Texas Intermediate (WTI) crude gained 7 cents, or 0.1%, to $90.10.
Three Iranian sources and a European official said the U.S. and Iran were exchanging messages on details of a memorandum after reaching a political understanding, but some issues still had to be discussed in detail, including a mechanism for the release of billions of dollars in frozen Iranian funds.
Weaker Chinese fuel demand is also helping to contain the Iran-driven oil rally, with data showing falling gasoline and diesel use as well as lower crude imports.
Iran’s joint military command also announced the closure of the Strait of Hormuz, including for oil tankers and commercial ships, saying any vessel attempting passage will come under fire. The strait is a vital waterway that handles about 20% of global oil and gas shipments.
“The latest escalation adds uncertainty to already fragile ceasefire negotiations and risks prolonged supply disruptions that have constrained global crude, fuel, and LNG exports since the conflict began,” MUFG analyst Soojin Kim said.
COMMERCIAL SHIPS CONTINUE TO TRANSIT STRAIT OF HORMUZ
On Wednesday, the U.S. military said on X that commercial ships continued to transit in and out of the Strait of Hormuz. It also said no U.S. warships have been struck in the waterway, after Iran’s state media reported U.S. ships near it were targeted by missiles and drones.
Three more LNG tankers have slipped out of the strait with their transponders off, heading to Asia, though the timing is unclear, LSEG and Kpler data show.
