The brief sigh of relief across global markets lasted barely a day. Brent crude climbed sharply back towards $100 a barrel on Thursday after Iran moved to close the Strait of Hormuz, sending a clear signal that the fragile Middle East ceasefire was already fracturing.
The benchmark was trading at $98.61 a barrel in early afternoon dealing, a rise of 4 per cent, having fallen as much as 16 per cent the previous day to below $91 on optimism that a two-week pause in hostilities might pave the way for a lasting peace. That optimism now looks badly misplaced.
Iran’s decision to shut the strait, through which roughly a fifth of the world’s oil and gas passes, came in direct response to Israeli airstrikes on Hezbollah targets in Lebanon, which Tehran condemned as a breach of the ceasefire agreement. It is a move that strikes at the heart of global energy security and one that will alarm policymakers and business leaders in equal measure.
Sultan Al Jaber, chief executive of Abu Dhabi’s state oil company Adnoc, did not mince his words. He made clear that Iran was using passage through the waterway as a tool of political leverage rather than respecting freedom of navigation, a distinction that matters enormously for businesses dependent on uninterrupted supply chains.
Nigel Green, chief executive of the financial advisory group deVere, echoed those concerns, pointing out that a fifth of the world’s oil supply continues to move through a corridor effectively controlled by one of the belligerents. For SMEs already grappling with elevated energy costs, it is a deeply uncomfortable position.
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