Oil prices reversed course to rise in Asian trade on Wednesday after the U.S. military said a naval blockade on Iran had been fully implemented, complicating hopes for more ceasefire talks.
Brent oil futures rose 0.4% to $95.18 a barrel, while West Texas Intermediate crude futures rose 0.2% to $88.36 a barrel by 22:43 ET (02:43 GMT).
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Oil prices were nursing steep losses this week, largely due to markets pricing in a potential end to the Iran war. Demand forecast cuts by the IEA and the OPEC also weighed.
US Central Command says Iran blockade fully implemented U.S. Central Command said in a social media post that a blockade of Iranian ports had been "fully implemented," and that U.S. forces have "completely halted economic trade going into and out of Iran by sea."
The move comes just two days after the U.S. began its naval blockade of Iran, which was aimed at further pressuring Tehran into accepting a ceasefire deal. This was after U.S.-Iran ceasefire talks in Pakistan ended with no agreement.
But a naval blockade against Iran stands to further increase shipping disruptions in the Strait of Hormuz, especially if Tehran retaliates against the move with military force.
Hormuz is a key point of focus in the Iran war, with Tehran having effectively blocked the channel in response to U.S.-Israeli hostilities in late-February.
The channel supplies roughly 20% of the world’s oil consumption, with several Asia-Pacific countries heavily dependent on Hormuz.
Oil prices clocked record gains in March as supplies were largely disrupted by the Iran war. ANZ analysts estimated at least 10 million barrels per day of supply had been cut off by the conflict.
They also noted that oil markets did not need a "worst-case escalation" to justify higher prices.
"Tight balances alone are sufficient to sustain the price of Brent near or above recent threshold levels. The longer the conflict drags on, the more persistent these price dynamics are likely to be," ANZ analysts said in a note.
Trump flags more Iran talks, claims war close to over U.S. President Donald Trump told the New York Post on Tuesday that additional U.S.-Iran peace talks could take place in the next two days in Pakistan’s capital.
In a later interview with Fox Business, Trump said he viewed the Iran war as being "very close to over."
Trump has repeatedly claimed American victory in the Iran war, and has backed down several times from harsher military action against the Islamic republic.
Despite the blockade, a tenuous ceasefire between the U.S. and Iran appeared to be holding, with no reports of new strikes since late last week. Washington was seen racing to hold more peace talks before the ceasefire expires next week.
