NEW YORK, June 1 (Xinhua) -- Crude oil futures prices surged over 5 percent in the morning session on Monday as concerns over U.S.-Iran tensions spiked.
West Texas Intermediate crude for July delivery gained as much as 6.94 U.S. dollars or 7.94 percent to 94.30 dollars per barrel at one point. Brent crude for August delivery jumped by 6.33 dollars, or 6.94 percent, to 97.45 dollars a barrel at the low point.
Iran has halted message exchanges with the United States via mediation in protest against Israel's actions in Lebanon, Iran's semi-official Tasnim news agency reported Monday.
"There will be no dialogue" until Iran's demands on "immediate cessation" of Israeli operations in Gaza and Lebanon are secured, it reported.
It added that Iran and its allies have determined "on the agenda to completely block the Strait of Hormuz, and to activate other fronts, including the Bab el-Mandeb Strait," in retaliation.
U.S. Central Command said on Sunday that the U.S. military conducted "self-defense strikes" on Iran's radars, command and control sites for drones in parts of Iran over the weekend.
In response, Iran's Islamic Revolution Guard Corps said Monday that it struck the air base from which U.S. forces launched an attack on a telecommunications tower on Sirik Island, with all predetermined targets destroyed, Iran's semi-official Mehr News Agency reported.
Oil prices could shoot up to as high as 180 dollars per barrel by August if peace talks crumble, and that will mean a severe global economic recession, warned Jorge Leon, senior vice president and head of geopolitical analysis at Rystad Energy.
"Although both sides exchanged revised proposals, the absence of a clear breakthrough and renewed incidents in the region reinforced concerns that restrictions affecting the Strait of Hormuz could remain in place for longer than previously expected," Joseph Dahrieh, managing director of financial service provider Tickmill, was quoted as saying.
Global oil reserves are falling fast, and markets are not pricing in an extended closure of the Strait of Hormuz, meaning that upside risks to oil prices loom, according to Ipek Ozkardeskaya, senior analyst with Swissquote.
Global oil inventories are being drawn down at a record pace due to the major loss of supply through the Strait of Hormuz, said leaders of the International Energy Agency, the International Monetary Fund, the World Bank Group and the World Trade Organization in a joint statement Friday.
"If shipping flows do not return to normal, continued rapid depletion of global oil inventories ahead of peak summer oil demand in the Northern Hemisphere would present increasing risks for fuel security, market conditions, and broader economic resilience," said the leaders in the statement.
