Global oil prices rose in Monday morning trade in Asia after President Donald Trump said the US has intercepted and seized an Iran-flagged cargo ship.
It came after Iran said on Saturday that it was closing the Strait of Hormuz waterway again to commercial vessels and that any ship that approaches it would be targeted.
Brent crude futures were up by 4.74% at $94.66 (£70.11) a barrel, while West Texas Intermediate was 5.6% higher at $88.55.
Energy markets have seen wild swings since the US and Israel attacked Iran on 28 February and Tehran responded with threats to target shipping in the strait, through which about 20% of the world’s oil and liquefied natural gas (LNG) passes.
Earlier, Trump said his representatives would be in Pakistan on Monday for negotiations. A White House official said Vice-President JD Vance would lead the US delegation.
But Iran’s state media said Tehran had “no plans for now to participate” in the talks, although Iranian officials have not clarified the country’s position yet.
“Oil markets continue to gyrate in response to oscillating social media posts by the US and Iran, rather than the realities on the ground which remain challenging for oil flows to resume in a rapid fashion”, analyst Saul Kavonic from financial services firm MST Marquee told the BBC.
“This is all part of negotiations, physically playing out in real time on the Strait of Hormuz.”
The Strait of Hormuz remained closed on Sunday, a day after the Islamic Revolution Guard Corps (IRGC) said it was ending a temporary reopening over the US blockade, which it said violated the terms of their ceasefire agreement. Iran said it would stay closed until the US ended its naval blockade.
Trump had on Friday said that the naval blockade would continue until a deal was agreed by the two countries.
Energy prices have seen volatile trading since the start of the Iran war.
Brent crude, a benchmark for oil futures prices, was trading at under $70 per barrel before the conflict. On 9 March it reached almost $120.
Futures contracts are an agreement to buy or sell assets at a set price on a specified date in the future. The Brent futures contract currently being quoted is for crude oil to be delivered in June.
The conflict has triggered a global energy crisis with prices rising sharply, while some countries are facing fuel shortages.
Asia has been hit particualrly hard as the region relies on shipments that usually pass through the Strait of Hormuz for around 90% of its energy needs.
Governments have ordered employees to work from home, cut the working week, declared national holidays and closed universities early in order to conserve their supplies.
Some South East Asian countries, including Singapore and Thailand, have called on people to curb their use of air conditioning to save energy.
Even China – which is thought to have reserves equivalent to three months of imports – is making adjustments, limiting a fuel price hike as citizens are faced with a 20% jump in price.
Airlines across the region have announced measures to deal with soaring jet fuel prices.
Last week, the head of the International Energy Agency (IEA) warned that Europe has “maybe six weeks of jet fuel left”.
Fatih Birol told AP that there could soon be flight cancellations if supplies remained blocked.
In the UK, petrol and diesel prices eased at the end of last week after after series of hikes.
By BBC News
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