Osmond ChiaEconomic journalist
Anadolu via Getty Images
Oil prices rose Friday after the United States and Iran exchanged fire in the key Strait of Hormuz waterway.
The US military said it carried out self-defense strikes in response to “unprovoked” Iranian attacks as US ships left the Gulf through the strait, south of Iran. Iran said the United States had violated the ceasefire, according to its state media.
The global benchmark Brent oil price rose almost 3% to almost $103 (£75) a barrel at one point before falling back to around $100.
Despite the attacks, US President Donald Trump said on Friday that Ceasefire between the United States and Iran is still in place.
Iranian state media reported that the situation “has now returned to normal.”
More than a fifth of the world’s oil and gas usually passes through the Strait of Hormuz, which has been effectively blocked since the start of the US-Israeli war against Iran.
Before the conflict began, oil was trading at around $70 per barrel.
Trump told reporters that three US destroyers were involved in the latest firefight.
Several small Iranian boats were “completely destroyed” and missiles targeting US ships were “easily knocked down”, he said on social media.
However, he also told ABC News that the Iranian strikes were “just a love pat.”
Trump said negotiations with Iran were ongoing and reiterated Washington’s demand that Tehran should never possess nuclear weapons.
“The negotiations are going very well, but they must understand that if the agreement is not signed, they will have a lot of pain,” he told journalists.
“I think they want the deal more than I do.”
The Iranian military initially accused the United States of violating the ceasefire by targeting its ships, including an oil tanker, heading toward the Strait of Hormuz, according to Islamic Republic of Iran Broadcasting.
“Air attacks” were also carried out along the coast near the strait, prompting Iranian forces to respond by attacking US military ships, inflicting “significant damage”.
The US military denied its ships were hit. US Central Command also said it was not seeking to escalate the conflict.
Traders view the ceasefire as “fragile” and have reacted accordingly, even as the United States and Iran downplay tensions, said Huifeng Chang, an economics researcher at the National University of Singapore.
This week, Trump said the war, which began on Feb. 28 when the United States and Israel attacked Iran, would be “rapidly ended” as Washington pushes for a framework for more detailed negotiations with Tehran.
