Oil prices flare as Iran tightens grip on Hormuz

• Iran attacked more than a dozen vessels near the Strait of Hormuz, tightening control over this vital oil shipping route and causing oil prices to rise above US$100 per barrel.
• The Revolutionary Guards expanded a no-go zone in the Gulf of Oman and Arabian Sea, warning vessels to get permission or face sanctions.
• The US and Iran remain in conflict, with the US pushing back and the IAEA referring Iran to the UN Security Council over nuclear issues, increasing regional tensions.

TEHRAN – Oil prices hovered above US$100 a barrel on Sept 10, a day after Iran said it attacked more than a dozen vessels trying to pass through the Strait of Hormuz.

Tehran tightened its grip on the vital oil and gas shipping route on Sept 9, expanding a no-go zone outside the waterway where it has restricted traffic since the war with the United States began on Feb 28.

The price of Brent crude, the benchmark international contract, was US$101.28 per barrel in early Asian trade on Sept 10, after spiking above US$100 the day before for the first time since July.

The jump in crude prices came after Iranian state media reported that Tehran’s Revolutionary Guards attacked two US vessels, eight oil tankers and 10 “non-compliant vessels” trying to pass through the strait, which normally carries around a fifth of the world’s oil.

British maritime monitor UKMTO said “several merchant vessels in the Northern Arabian Gulf and the Gulf of Oman” – which surround the strait – were “subject to disabling fire as part of ongoing military activity in the region”.

US President Donald Trump pledged that oil prices would come down “as soon as” the United States wins the war, which has hit an impasse more than six months after US-Israeli strikes on Tehran triggered the conflict.

“Oil will be going down as soon as we win the war with Iran,” Trump told Republicans in Texas, as the party struggles in polls against the Democrats.

“We’re winning it. We control the Hormuz Strait,” he said, repeating his suggestion of renaming the waterway as “Trump Strait”.

Trump’s optimism came despite Iran’s powerful Revolutionary Guards adding parts of the Gulf of Oman and the Arabian Sea to a new “prohibited zone” on Sept 9, saying exact coordinates will be announced later.

“If a vessel enters that area without coordination, it will be subject to our sanctions,” Guards spokesman Hossein Mohebi told state television.

Iran has asserted control of the Strait of Hormuz since the war broke out in February, with traffic through the waterway virtually paralysed.

Tehran requires vessels to obtain permission and pay transit fees before using the strait.

Trump said on Sept 9 the war would conclude right after the midterm elections in November because Iran “can’t hold out any longer”.

However, The Wall Street Journal quoted US officials saying that Trump’s top advisers are privately warning that the war could drag on through the remaining two years of his term.

The Guards, the ideological arm of the military, also said they struck a US military base in Jordan in response to US forces destroying five Iranian oil tankers a day earlier.

Jordan’s army shot down 18 missiles fired at the kingdom, it said.

Iran’s Foreign Ministry condemned the attack on its oil tankers as “an overt threat to regional and international peace and security”, saying the strikes “increase the dangers of tensions in the region”.

It said the targeting of US military facilities in the region was “self-defence”.

The US military for its part had said it was responding to an Iranian attack targeting an American warship, the second such incident in less than a week.

Long war?

Iran’s Guards said the war could be brought to an end if Washington meets its conditions, which include demands on the wars in Lebanon and Yemen.

“It must... refrain from renewed threats, withdraw the Israeli regime’s army from Lebanon, end the blockade of Yemen, release US$24 billion (S$30.3 billion) in Iran’s frozen assets and refrain from any interference in the country’s nuclear and missile capabilities,” Mohebi said, according to Fars news agency.

As Washington tries to choke off Iran economically, the International Atomic Energy Agency board of governors on Sept 9 voted to refer Iran to the UN Security Council over its nuclear “non-compliance”, in a diplomatic move that piles pressure on Tehran.

The resolution seen by AFP was adopted by a 23-3 vote with eight abstentions, they said. Russia, China and Niger voted against it.

Iran’s representative to the UN nuclear watchdog said the resolution was passed under US pressure, saying it “has no basis and will not bring any results”.

Israeli Prime Minister Benjamin Netanyahu repeated his claim Iran was about to collapse.

“The main task is to bring down the terror regime in Iran. We are very close to that,” he said on Sept 9 during a troop visit in southern Syria, where Israel has occupied what it calls a “security zone”. AFP