Oil rises after US urges caution for vessels traveling near Iran

Oil prices rose more than 1% on Monday after the U.S. Department of Transportation issued an advisory to U.S.-flagged vessels to stay as far as possible from Iranian territory while voyaging through the Strait of Hormuz and Gulf of Oman.

Brent crude oil futures were up $1.20, or 1.76%, at $69.25 a barrel by 1:01 p.m. ET. U.S. West Texas Intermediate crude rose $1.11, or 1.75%, to $64.66.

The U.S. DOT’s Maritime Administration agency noted that vessels going through the Strait of Hormuz and Gulf of Oman have historically faced the risk of being boarded by Iranian forces, including as recently as February 3. The agency advised U.S.-flagged ships to stay close to Oman while eastbound in the Strait of Hormuz.

The advisory renewed concerns that tensions between the U.S. and Iran could lead to oil supply disruptions. About a fifth of the oil consumed globally passes through the Strait of Hormuz between Oman and Iran.

“The Iranian risk premium cannot be fully defused as long as U.S. warships are located where they are,” said SEB analyst Bjarne Schieldrop.

Oil prices had dropped earlier in the session, extending last week’s losses, after the U.S. and Iran pledged to continue indirect talks following what both sides described as positive discussions.

Still, on Saturday Iran’s foreign minister said the country will strike U.S. bases in the Middle East if attacked by U.S. forces, which have built up their naval presence in the region over recent weeks.