Oil price rises after Iran says it stops ships in Hormuz

CAIRO/DUBAI: Oil prices rose on Friday after Iran said it had stopped two vessels seeking to exit the Strait of Hormuz, underscoring concerns over global ​energy supplies following a drone attack on ships in a Mediterranean Egyptian port this week.

Iran said four other tankers turned back after its forces intervened, although the Iranian reports could not ‌be independently confirmed.

Two large tankers carrying oil loaded from the Gulf were recorded passing through the strait, a narrow waterway between Iran and Oman that normally carries about one-fifth of the world’s energy shipments.

Two other commodities vessels also transited, according to shipping data from Kpler, which does not capture vessels that have been transiting the strait with their transponders off.

Iran has blocked most shipping through the Strait of Hormuz since the start of the five-month-old conflict while its Houthi allies in Yemen this month began threatening the Bab el-Mandeb, the ​strait at the other end of the Red Sea from the Suez Canal, another export route for Saudi crude.

Oil prices rose more than 1% on Friday, with traders citing the Iranian reports, which followed a similar ​report earlier this week that was not corroborated. Benchmark Brent crude futures were on track to rise 23% in July and economists and analysts polled by Reuters expect prices ⁠to rise further this year.

There were no reports of new U.S. attacks on Iran overnight between Thursday and Friday after what was a sharp escalation in its war on Iran earlier in the week, with joint U.S.-Saudi strikes ​on Iranian-allied forces in Iraq.

U.S. President Donald Trump, in a statement to Fox News on Friday, said the war was going well. “All you can do is keep winning, then eventually something will happen,” he said, without giving details.

At a ​cabinet meeting later on Friday at the Camp David retreat, Trump said he believed a deal could still be reached with Iran and Special Envoy Steve Witkoff, his son-in-law Jared Kushner and Secretary of State Marco Rubio are involved in talks.

However, he also said he was losing faith in the Iranians saying “they break their word so often” – a claim that Tehran has frequently levelled at Washington – and said he would be “hitting them.”

IRANIAN CONTROL

A body set up by Iran to manage the Strait of Hormuz said on Friday crossings ​remained impossible due to “continued aggressive actions by U.S. military forces in the region”, Iranian media reported. Some ships have negotiated passage with Tehran, angering Washington.

The Persian Gulf Strait Authority said that as soon as stability and calm was ​restored, all requests would be reviewed and transit permits would be issued gradually.
U.S. Central Command said on Thursday U.S. forces were still blockading Iranian oil exports via the Gulf and had successfully completed a heavy wave of strikes.

Iran’s army said it targeted ‌U.S. military facilities ⁠in Kuwait and Bahrain on Friday in response to the U.S. attacks, citing an attack on a house on Qeshm, an island near the Strait of Hormuz where Iran began attacking shipping.

Kuwait’s military said it destroyed attacking drones, with some damage from falling debris but no casualties. There was no immediate comment from Bahrain.

REUTERS POLL SHOWS OIL PRICES ARE EXPECTED TO RISE FURTHER

Even as Iran and its Houthi allies have fired on tankers transiting the Strait of Hormuz and Bab el-Mandeb, the Suez Canal and Sumed pipeline continued to offer safe, northbound routes for Saudi energy exports via the Red Sea.

No one has claimed responsibility for what Egypt’s cabinet said on Thursday was an unidentified drone that caused a ​fire on two vessels a day earlier at the ​Mediterranean port of Damietta, which is more than 160 ⁠km (100 miles) west of the canal by road.

Iran has denied any involvement in the Damietta strike.

“Egypt is an important friend and partner in the region, and its security is of utmost importance to us,” Iranian Foreign Minister Abbas Araqchi wrote on social media. “We must all be vigilant against Israeli plots and false-flag operations designed to undermine regional peace.”

Israel’s ​prime minister’s office did not immediately respond to a Reuters request for comment on Araqchi’s allegations.

SAUDI PROPOSES MULTINATIONAL MARITIME DEFENCE COALITION

Iran-aligned Houthis on July 20 declared a maritime ​embargo against Saudi Arabia, opening ⁠a new front against the U.S. and its allies in the Iran war.

Recent Houthi attacks on shipping prompted London’s marine insurance market on Thursday to widen its “high risk” zone in the Red Sea to include more coastline adjacent to Saudi ports.

Saudi Arabia unveiled plans on Thursday for a multinational maritime defence coalition aimed at protecting international shipping and energy supply routes in the Red Sea region.

A growing volume of Saudi oil, along with other shipping, has been diverted north up the Red Sea toward the Suez ⁠Canal and the ​SUMED pipeline, according to data from market intelligence firm Kpler. For Asian customers, however, that means a longer voyage around Africa.

Oman has ​presented Iran with a plan backed by Gulf states to manage the Strait of Hormuz, including collecting voluntary fees for using it, people familiar with the matter told Reuters.

While Iran has publicly rejected the Omani proposal, its semi-official ILNA news agency quoted foreign ministry spokesperson Esmaeil Baghaei as saying ​talks with Oman over the strait were continuing.