Global crude oil prices surged on Thursday after reports emerged that Iran’s parliament is reviewing legislation that could prohibit U.S. and Israeli vessels from transiting the strategically vital Strait of Hormuz, intensifying concerns over potential disruptions to global energy supplies.
Brent crude futures climbed $3.09 (3.89%) to $82.54 per barrel, while U.S. West Texas Intermediate (WTI) crude rose $2.49 (3.31%) to $77.71 per barrel during afternoon trading.
According to reports, an Iranian parliamentary committee is examining a draft bill that would ban vessels from the United States, Israel, and countries deemed hostile from using the Strait of Hormuz. The proposal also includes penalties of up to 20% of the cargo’s value for ships found violating the restrictions. The bill remains under review and has not yet become law.
Why the Strait of Hormuz Matters
The Strait of Hormuz is one of the world’s most critical maritime chokepoints, handling roughly 20% of global oil and liquefied natural gas (LNG) shipments. Any threat to shipping through the passage immediately raises fears of tighter global energy supplies and higher crude prices.
Markets React to Rising Geopolitical Risks
The proposed legislation comes amid heightened geopolitical tensions in the Middle East, prompting traders to factor in a higher risk premium for crude oil. Concerns over shipping disruptions and regional instability have outweighed broader market fundamentals, leading to a sharp rally in oil benchmarks.
Key Highlights
- Brent crude: $82.54 per barrel, up 3.89%
- WTI crude: $77.71 per barrel, up 3.31%
- Iran reviewing bill to bar U.S. and Israeli vessels from the Strait of Hormuz.
- Proposed penalties could reach 20% of cargo value for violators.
- The Strait of Hormuz carries about one-fifth of global oil and LNG trade, making it a crucial route for world energy markets.
