Brent Crude Rises to $87.08 After US Strikes on Iran and Blockade Announcement

Brent crude rose as much as 4.6 percent to $87.08 a barrel on Tuesday, its highest level in just over a month, The Guardian reported. The benchmark had already climbed as much as 10 percent on Monday after President Donald Trump announced a blockade of Iranian shipping. The US carried out a third night of strikes against Iran, pushing prices higher.

The Dutch natural gas contract for August delivery increased nearly 3 percent to €52.8 a megawatt hour, the highest since early April.3 percent to 128.27p a therm, its highest level in more than three months. Financial markets priced in a quarter-point UK rate rise by September for the first time in a month, with another increase expected by year-end.

Traders also forecast the ECB will raise rates by a quarter point in September and again by December. At the start of the month, swaps had priced in less than a quarter-point rise for both the Bank of England and ECB. The 10-year UK gilt yield rose five basis points to 5.02 percent, its highest since May, while the two-year gilt yield jumped eight basis points to 4.45 percent.

President Trump said the Strait of Hormuz would stay open “with or without Iran” but that the US would charge fees on ships transiting the waterway. A 20 percent fee would cover “any and all costs necessary” to provide security, he stated. The United States and Iran each said the strait is under its control, AP News reported.

Oil traded at $72.48 a barrel before US-Israeli strikes on Tehran in late February and reached $120 in April. Only six cargo ships traversed the strait on Sunday. The FTSE 100 slipped 0.4 percent on Tuesday, while BP shares rose 2.4 percent and Shell shares gained 1.7 percent.

The Stoxx Europe 600 fell 0.5 percent. In Asia, South Korea’s Kospi index rose 0.7 percent, Japan’s Nikkei 225 gained 0.7 percent and the Chinese Shanghai Composite advanced 1.4 percent. Brent crude had climbed 9.6 percent to $83.30 on Monday, AP News reported.