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Crude Prices Jump as Iran Seizes US Oil Tanker

Prices of crude oil climbed by about 3 per cent on Thursday, spurred by fresh tension after Iran seized an oil tanker off the coast of Oman, raising the prospect of escalating conflict in the Middle East.

Brent futures rose by $2.23 or 2.9 per cent to $79.03 a barrel and the US West Texas Intermediate (WTI) crude increased by $2.34 or 3.35 per cent to $73.71 per barrel.

An American oil tanker reported to have been hijacked in the Gulf of Oman earlier on Thursday was seized by Iran in retribution for the US seizure of 1 million barrels of Iranian oil last year.

The Marshall Islands-flagged oil tanker, St. Nikolas, was previously named the Suez Rajan, which was entangled in a sanctions dispute for transporting Iranian oil that eventually led to the seizure of that oil in 2023.

The ship was reportedly on its way to Turkey when it was boarded by men in masks near Oman’s Port of Sohar. Shortly afterwards, Iran’s state-run TV reported that the Iranian Navy had seized the vessel.

The seizure of the vessel which was carrying 145,000 metric tonnes of oil loaded in Iraq comes at a time of escalating tensions in the Red Sea, where Yemen’s Houthi rebels have been targeting merchant vessels in response to a war between Israel and Hamas.

However, this hijacking took place in a different area of the waterways between Iran and Oman and near the Strait of Hormuz.

Tensions rose as the US and Britain hinted they would take further measures if the attacks continued.

In a related development, the United Nations Security Council passed a resolution demanding an immediate end to the Houthi strikes.

The Houthis vowed that any attack on the group would not go without a response.

Israel, meanwhile, faced down accusations at the World Court of genocide in its war in Gaza as South Africa at the International Court of Justice (ICJ) in the Hague accused Israel of violating the 1948 genocide convention, enacted in the wake of the mass murder of Jews in the Holocaust, which mandates all countries to ensure such crimes are never repeated.

A German economic institute said on Thursday that global trade dropped by 1.3 per cent from November to December 2023 as militant attacks on merchant vessels in the Red Sea led to a plunge in the volumes of cargo transported in the region.

In the US, data showed consumer inflation rose to 4.1 per cent in 2023 from 8.0 per cent in 2022, representing a 3.4 per cent from December 2022 to 2023 while on a monthly basis, it rose 0.3 per cent.

The rise in inflation could delay a much-anticipated interest rate cut in March from the US Federal Reserve as lower interest rates would reduce consumer borrowing costs, which could boost economic growth and oil demand.

Oil prices rose even though refiners in China, the world’s top oil importer, asked for less Saudi crude oil in February even though Saudi Arabia, the world’s top oil exporter, announced its biggest price cut in 13 months.