The price of Brent crude oil surged past $125 a barrel early Thursday as stalled US-Iran talks raised doubts over the reopening of Hormuz and a permanent end to the Iran war, even as US President Donald Trump's administration sought to form an international coalition to restore freedom of navigation in the strait crucial for the global oil trade.
Brent crude to be delivered in June jumped 6.2 per cent to $125.36 early Thursday. Brent to be delivered in July rose 3.1 per cent to $13.85.
Before the start of the war in late February, Brent crude was trading around $70 per barrel.
The Iran war, which is in its ninth week, still sees no clear path to an end. The US has continued its blockade of Iranian ports while the Strait of Hormuz is closed, pushing oil prices higher.
US futures and share prices in Asia retreated.
US seeks international coalition
US secretary of state Marco Rubio has approved the creation of the Maritime Freedom Construct (MFC), seeking the participation of other countries to form an international coalition open up the Strait of Hormuz, according to a State Department cable seen by Reuters.
The cable dated April 28 described it as a joint initiative by the State Department and the Pentagon.
"The MFC constitutes a critical first step in the establishment of a post-conflict maritime security architecture for the Middle East. This framework is essential to ensuring long-term energy security, protecting critical maritime infrastructure, and maintaining navigational rights and freedoms in vital sea lanes," the cable said.
The component of the initiative led by the State Department would serve as the diplomatic hub between partner countries and the shipping industry, while the Pentagon component operating out of CENTCOM headquarters in Florida would coordinate real-time maritime traffic and communicate directly with vessels transiting the Strait, the cable said.
The story was first reported by The Wall Street Journal on Wednesday.
US embassies should deliver the demarche orally to partner nations by May 1, but not to Russia, China, Belarus, Cuba and "other US adversaries", said the cable.
Participation could be in the form of diplomacy, information sharing, sanctions enforcement, naval presence or other forms of support, it said.
"We welcome all levels of engagement and do not expect your country to shift naval assets and resources away from existing regional maritime constructs and organizations," the cable said.
"The MFC is distinct from the President’s Maximum Pressure campaign and from ongoing negotiations."