Oil prices spike after Iran seizes two tankers

Brent crude, the international benchmark, rallied into the close and extended its gains in post-settlement trade, climbing 2.1 per cent to $63.23 per barrel. US West Texas Intermediate was up 1.5 per cent at $56.15 per barrel.

Prices turned sharply higher on revelations that Iranian authorities had captured two tankers — one UK-flagged vessel and one Liberian-flagged vessel — that were travelling through the strait, a key international shipping route for oil.

Jeremy Hunt, British foreign secretary, said the UK government was looking into securing the release of the two vessels. Iranian news agencies suggested the Liberian-flagged ship was captured and later released.

The seizures added to worries over tensions between Iran and the west, 24 hours after the US said its navy brought down an Iranian drone that came too close to one of its ships and failed to respond to warnings.

Meanwhile, Iran had threatened to retaliate after the UK’s decision to seize an Iranian tanker suspecting of smuggling oil to Syria this month.

“The oil market is now acting like the whole peace process with Iran has gone to pieces,” Phil Flynn, senior market analyst at Price Futures Group, wrote in a note Friday morning.

Oil prices were still down for full week, reflecting worries over weak global demand and trade uncertainty. Prices have come under pressure in recent weeks due to expectations that robust US production would offset supply cuts by OPEC.

Brent crude fell 6.4 per cent this week, its biggest weekly loss since December. West Texas Intermediate, down 7.6 per cent, posted its worst week in nearly two months.

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