Iran on Thursday issued a warning that the world should be ready for oil at USD 200 per barrel, as it ramped up attacks on merchant ships in the Strait of Hormuz.
This comes as the International Energy Agency (IEA) recommended a massive release of strategic reserves to dampen one of the worst oil shocks since the 1970s. The ongoing conflict in West Asia has thrown global energy markets and transport into chaos.
Iranian officials made it clear they intended to impose a prolonged economic shock. “Get ready for oil to be $200 a barrel, because the oil price depends on regional security, which you have destabilised," Ebrahim Zolfaqari, spokesperson for Iran’s military command, said in comments addressed to Washington.
After offices of a bank in Tehran were hit overnight, Zolfaqari said Iran will respond with attacks on banks that do business with the US or Israel. People across the Middle East should stay 1,000 metres from banks, he said.
On Wednesday (March 11), three vessels were reported to have been hit in the Strait of Hormuz – a key energy artery closed since the war began on February 28 – as Iran’s Revolutionary Guards said it fired on ships in the Gulf that had disobeyed their orders. Despite these attacks, US President Donald Trump said he is not yet ready to call an end to his country’s military operations with Israel.
Trump said American forces had knocked out 58 Iranian naval ships and that oil prices would come down. He said Iran was “pretty much at the end of the line".
“Doesn’t mean we’re going to end it immediately, but… They’ve got no navy, they’ve got no air force, they’ve got no anti-air traffic anything. They have no systems of control. We’re just riding free range over that country," Trump said.
At sea, a Thai-flagged bulk carrier was set ablaze forcing the evacuation of crew, with three people reported missing and believed trapped in the engine room.
Two other ships, a Japanese-flagged container ship and a Marshall Islands-flagged bulk carrier, were also reported to have sustained damage from projectiles bringing the number of merchant ships that have been hit since the war began to 14.
While Trump said the United States will now “look very strongly" at the Strait of Hormuz, there has been no sign that ships can safely sail through the waterway. In fact, the Islamic Revolutionary Guard Corps (IRGC) – Iran’s elite force that now controls the strait – has doubled down on its threats and said no ship can pass through without its permission.
Rear Admiral Alireza Tangsiri, commander of the IRGC naval force, said any vessel seeking to sail through must obtain Iran’s approval or else become a target of Iranian attacks. He said two ships, the Express Rome and Mayuree Naree, were targeted after ignoring warnings.
“Any vessel intending to pass must obtain permission from Iran," he said in a post on X.
According to Iranian state media, these restrictions were intensified amid ongoing US-Israeli strikes. The Revolutionary Guards has designated a specific “space in the sea where IRGC will hit any ships", warning that “moving a few dozen meters results in an attack from the IRGC", specifically via “drones."
Iran has deployed about a dozen mines in the channel, further complicating the blockade, which has had a massive impact as more than 20 million barrels of crude oil – roughly a fifth of global consumption – pass daily through this narrow channel. But an effective drone-missile attack has paralysed shipping in these waters since the beginning of the conflict.
Oil prices, which shot up earlier in the week to nearly $120 per barrel before settling back to around $90, rose nearly 5 percent on Wednesday amid renewed fears over supply disruption, while Wall Street’s main share indexes fell. The war unleashed with joint US and Israeli airstrikes nearly two weeks ago has so far killed around 2,000 people, mostly Iranians and Lebanese.
On Wednesday, the G7 group of nations – the US, Canada, Japan, Italy, Britain, Germany and France – agreed to examine the option of providing escort for ships so they can navigate freely in the Gulf.
The US military told Iranians to stay clear of ports with navy facilities, drawing a warning from Iran’s military that if the ports were threatened, economic and trade centres in the region will be “legitimate targets".
The IEA, made up of major oil consuming nations, recommended releasing 400 million barrels from global strategic reserves to stabilise prices, the biggest such intervention in history, which was swiftly endorsed by the US. Trump said the decision will “substantially reduce oil prices as we end this threat to America and the world".
The US, as per energy secretary Chris Wright, has authorised the release of 172 million barrels from its strategic petroleum reserve (SPR) from next week. The rate at which countries can release strategic reserves will vary and the amount released will account for just a fraction of the supply through Hormuz.
Source: News18