Oil prices jump as US, Iran trade fire in Strait of Hormuz

Oil prices have jumped after clashes between the United States and Iran in the Strait of Hormuz tested their tenuous ceasefire.

Futures for Brent crude rose as much as 7.5 percent during a volatile trading session on Thursday, before easing as Asia’s markets opened on Friday morning.

The international benchmark stood at $101.12 per barrel as of 3:00 GMT, down from the day’s high of $103.70.

The latest rise in came after the US and Iran exchanged fire in the critical strait, a conduit for about one-fifth of global oil and natural gas supplies, despite the truce announced between the sides on April 7.

US Central Command said it launched strikes on Iran after three US Navy guided-missile destroyers came under attack from Iranian missiles, drones and small boats in the strait.

Iran’s Khatam al-Anbiya Central Headquarters earlier accused the US of violating the ceasefire by attacking an Iranian oil tanker and another vessel in the vicinity of the waterway.

The Iranian military headquarters also accused the US are targeting civilian areas, including Qeshm Island.

US President Donald Trump on Thursday appeared to downplay the clashes, saying the ceasefire remained in effect, while Iran’s state-run Press TV said the situation had gone “back to normal.”

Shipping in the strait has been at a near standstill since late February amid the threat of Iranian attacks on the massive oil tankers that usually transport much of the world’s energy supplies.

Brent prices are up about 40 percent compared to before the war amid an estimated shortfall in daily production of 14.5 million barrels.

Asian stock markets opened lower on Friday amid the heightened tensions, with Japan’s benchmark Nikkei 225, South Korea’s KOSPI and Hong Kong’s Hang Seng Index each falling more than 1 percent.

On Wall Street, the benchmark S&P 500 fell about 0.4 percent overnight after hitting an all-time the previous day.