Strait of Hormuz tension, crude oil prices rise more than 3 percent in the global market

The anxiety over Iran and the US and the risk of transferring energy through the Strait of Hormuz have again had an impact on the world oil market. The price of crude oil at the beginning of the Asian trading day climbed by more than three percent, primarily because of worries about possible supply disruptions.

The latest data from the global market shows that the price of Brent crude oil increased by $2.75, or 3.12 percent, to $90.85 per barrel. West Texas Intermediate (WTI) crude oil also ticked up by $2.56, or 3.10 percent, to $85.05 a barrel.

As the tensions in the area escalate further or oil transit through the Strait of Hormuz is disrupted, investors are increasingly worried there may be major strains in global energy supplies, which could directly affect prices, according to market analysts.

Experts remind that about 20 percent of the crude oil and liquefied natural gas (LNG) consumed worldwide passes through the Strait of Hormuz. Thus, any disruption of this vital sea route will be a big challenge to the global energy market and shipping activities, and the consequent logistic supply chain.

Economists say the current situation will drive up the prices of ship insurance, freight rates and continued uncertainty will plague the world’s energy market. If tensions in the region increase further, crude oil prices may experience further volatility in the coming days.

Meanwhile, investors and the energy markets are watching the diplomatic and security climate in the region closely, as future developments could be significant in dictating the future direction of global oil supplies, prices and financial markets. The environment in the Middle East and supply issues appear to be a major influence on the present market trend worldwide.