Oil jumps as UK government holds emergency talks over tanker seized by Iran

Tom Belger
·Finance and policy reporter
Updated
A picture taken on July 21, 2019, shows Iranian Revolutionary Guards patrolling around the British-flagged tanker Stena Impero as it's anchored off the Iranian port city of Bandar Abbas. - Iran warned Sunday that the fate of a UK-flagged tanker it seized in the Gulf depends on an investigation, as Britain said it was considering options in response to the standoff. Authorities impounded the Stena Impero with 23 crew members aboard off the port of Bandar Abbas after the Islamic Revolutionary Guard Corps seized it Friday in the highly sensitive Strait of Hormuz. (Photo by Hasan Shirvani / MIZAN NEWS AGENCY / AFP) (Photo credit should read HASAN SHIRVANI/AFP/Getty Images)
Iranian Revolutionary Guards patrolling around the British-flagged tanker Stena Impero. Photo: HASAN SHIRVANI/AFP/Getty Images

Oil prices jumped on Monday as tensions escalated in the Gulf, with the UK government weighing up its options after Iran seized a British tanker.

Brent crude futures (BZ=F) were up 1.5% to $63.40 a barrel in early trading, while West Texas Intermediate crude futures (CL=F) were up 1% to $56.20 a barrel.

The threat of disruption to oil supplies in the Gulf rose as Iran’s Revolutionary Guard announced they had captured a British-flagged tanker on Friday.

UK prime minister Theresa May was due to hold an emergency ‘Cobra’ meeting to discuss Britain’s response on Monday morning.

British-registered ships were urged to avoid the Strait of Hormuz after the latest incident, despite its importance as a key route for around 20% of global oil supplies.

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It comes after the British seizure of an Iranian super-tanker earlier this month, with Iran accused of breaching EU sanctions on supplying Syria, but Britain also thought to be acting under US pressure.

The uptick in prices marked a reversal of declines last week as concerns grew about global over-supply.

"Falling global demand and rising US stockpiles have helped turn oil charts very bearish, but that may not last as tensions remain high in the Persian Gulf," Edward Moya, senior market analyst at OANDA in New York, said in a note.