Oil prices would be down but then Iran seized a British tanker

• Crude oil prices rose 0.8% after the Iranian Revolutionary Guards seized a British oil tanker in the Gulf region last week.
  
• The British government will decide its response to Iran today.
  
• The spike in oil prices is bad for India, which imports over 80% of the crude oil it needs.
  

The prices of crude oil are on a high yet again as tensions in the Middle East don’t see an end. The Iranian military seized a British oil tanker in the Strait of Hormuz, as per reports and the UK government is expected to finalise its response today. The fear of escalating tension in the Middle East has led to a spike in oil prices and that’s always bad news for India, which imports over 80% of all the crude oil it needs.

The price of Brent Crude rose 0.8% on Monday morning at $ 63.33 per barrel.

Without the West’s standoff with Iran, the price of crude oil would be falling sharply. “The International Energy Agency (IEA) does not expect oil prices to rise significantly because demand is slowing and there is a glut in global crude markets,” Faith Birol, Executive Director, IEA told Reuters. This is largely due to rising output and inventory in the US. However, the tensions in the middle east are keeping oil buoyant, because traders fear that any blowout will affect oil supply.

The crude oil price in the New York exchange fell over 7% while the Brent Crude, which affects the Indian crude oil basket the most, fell more than 6% last week.

Response to Iran

Briish Prime Minister is also expected to chair a meeting of Britain’s emergency response committee today to discuss the crisis. The US has also jumped in again after the incident took place and an official said that the US will destroy any Iranian drones that try to come close to is ships. Last week, the US claimed that it had destroyed an Iranian drone in the Strait of Hormuz, which Iran had denied.

The mood in the Middle East have been grim since the US withdrew from the Iran nuclear deal and imposed fresh sanctions on it. The latest series of escalations began with the capture of four oil tankers in the Gulf region last month.