Oil Prices Surge as US Threatens Iran Sanctions, Strait of Hormuz Traffic Remains Low

Oil prices have increased for the second week in a row due to US threats of imposing sanctions on Iranian oil exports. The Brent benchmark has gained more than 6.1% this week, while WTI has risen 5.3%. According to ANZ analyst Soni Kumari, 'the U.S. is taking a very firm stance against Iran, with the blockade back in place and threats of tougher sanctions on Iranian oil exports, and that's why we are seeing oil prices back above $90 a barrel.'

The US has threatened to impose the toughest financial penalties in history, which could exacerbate the current situation at a time when traffic through the Strait of Hormuz remains well below normal levels. The Strait of Hormuz is a critical waterway that handles about a fifth of global oil and liquefied natural gas supplies.

Crispus Nyaga, research analyst at Empire FX, said 'the immediate impact on supply may be limited as Iranian exports are already heavily constrained by the U.S. naval blockade.'