oil pump
File photo: The sun sets behind an oil pump outside Saint-Fiacre, near Paris. Image Credit: Reuters

Abu Dhabi: Tensions with Iran in the Strait of Hormuz could see higher oil prices in the short term, with prices going up on Friday after the seizure of a British oil tanker by the Iranian Revolutionary Guards Corps (IRGC).

The events on Friday, which also saw a Liberian flagged ship briefly stopped by the IRGC, was just the latest in a series of incidents that have taken place over the course of the last three months which have also included attacks on oil tankers.

With more than 20 per cent of the world’s oil passing through this narrow waterway, oil traders have been anxiously watching escalating tensions unfold, putting oil markets on edge.

The UK’s foreign secretary Jeremy Hunt is expected to announce a series of both economic and political sanctions on Monday against Iran at the House of Commons.

The foreign secretary called on Iran to release the Stena Impero and said his government was not looking for escalation.

The UK’s Mission to the UN on Saturday also sent a letter to the UN Security Council condemning the seizure of its oil tanker calling Iran’s actions “illegal interference.”

Meanwhile, Iran’s ambassador to the UK Hamid Baeidinejad on Sunday tweeted out that Iran was “ready for different scenarios” in the coming days, calling on the UK to avoid escalating “existing tension between Iran and the UK well beyond the issue of ships.”

Despite the recent geopolitical tensions, Brent closed at $62.83 on Friday, down six per cent compared to the previous week, with West Texas Intermediate closing at $55.86, down 7.5 per cent from the last week as well.

Reports of slower economic growth in places like China and the EU have resulted in oil markets reacting negatively to the news with prices going down as a result, highlighting how geopolitical tensions may not be enough alone to support the oil market as in previous years as economic strains and supply demands weigh it down.