Oil Price Jumps After 1mln Liter of Smuggled Fuel Seized in Persian Gulf

The price of oil spiked on Thursday just minutes after Tehran seized a “foreign vessel” which was “smuggling” one million liters of fuel near Larak Island in the Strait of Hormuz off Iran’s coast.

Oil prices reacted sharply to the media report over the seizure of the ship in the Persian Gulf, with Brent crude up 1% at $64.27 a barrel and West Texas Intermediate futures up 0.8% at $57.22 a barrel.

Naval forces of the Islamic Revolution Guards Corps (IRGC) have seized a foreign ship smuggling fuel in the Persian Gulf in mid-July, according to a statement by the public relations office of the IRGC Navy's first zone on Thursday. The foreign vessel was smuggling a million liters of fuel from Iran and was seized in Iranian waters South of Lark island. Yet, the IRGC refuted claims by western media outlets that it has seized any other foreign ship.

Iran Seizes Foreign Vessel Carrying "Smuggled Fuel" in Strait of Hormuz https://t.co/qeEiPiOJcw pic.twitter.com/sKDcdKuGb3

Analysts believe recent moves by foreign powers in the Middle East such as US sanctions on Tehran's oil, UK seizure of Iranian supertanker, as well as, "sabotage operations" on oil ships will intensify the turmoil in the region and the turmoil in the international energy market, stressing that it will not serve regional peace and stability.

US Army Colonel: Tehran Not Behind Fujairah Operation, But Tankers Now at Bottom of Sea If Iranians Involved https://t.co/p46dpndMxS pic.twitter.com/9h5wOMs8Cg

Tensions mounted between Tehran and Washington last May, when President Donald Trump pulled the United States out of the 2015 nuclear deal with Iran, officially known as the Joint Comprehensive Plan of Action (JCPOA), and re-imposed harsh sanctions against the Islamic Republic in defiance of global criticism. The American leader and his hawkish advisers National Security Advisor John Bolton and Secretary of State Mike Pompeo have since been stepping up pressure against Iranians, threatening Tehran of military operation.

Analysts note that a full-fledged war between the US and Iran would immediately affect global crude prices, as the recent escalation of tensions in the Middle East has already shown.

In early July, British marines and Gibraltar police seized the Iranian tanker off the Southern coast of the Iberian Peninsula. Gibraltar’s Chief Minister Fabian Picardo claimed that the ship was transporting crude oil to Syria “in violation” of the EU sanctions placed on Damascus. Washington has applauded the move, hailing it as a sign that Europe is on board with the US’ unilateral sanctions against Iran.

The Iranian Foreign Ministry condemned the “illegal move” of London and describing it as “tantamount to piracy”. Tehran accused the UK of doing Washington’s bidding and helping the US attempt to stifle the Islamic Republic’s oil exports, rejected London's claim that the supertanker was carrying crude for Syria.