UK markets open in 3 hours 38 minutes

Oil jumps as UK government holds emergency talks over tanker seized by Iran

Tom Belger
Finance and policy reporter
Iranian Revolutionary Guards patrolling around the British-flagged tanker Stena Impero. Photo: HASAN SHIRVANI/AFP/Getty Images

Oil prices jumped on Monday as tensions escalated in the Gulf, with the UK government weighing up its options after Iran seized a British tanker.

Brent crude futures (BZ=F) were up 1.5% to $63.40 a barrel in early trading, while West Texas Intermediate crude futures (CL=F) were up 1% to $56.20 a barrel.

The threat of disruption to oil supplies in the Gulf rose as Iran’s Revolutionary Guard announced they had captured a British-flagged tanker on Friday.

UK prime minister Theresa May was due to hold an emergency ‘Cobra’ meeting to discuss Britain’s response on Monday morning.

British-registered ships were urged to avoid the Strait of Hormuz after the latest incident, despite its importance as a key route for around 20% of global oil supplies.

READ MORE: Pound choppy as chancellor Philip Hammond threatens to quit on Boris Johnson premiership

It comes after the British seizure of an Iranian super-tanker earlier this month, with Iran accused of breaching EU sanctions on supplying Syria, but Britain also thought to be acting under US pressure.

The uptick in prices marked a reversal of declines last week as concerns grew about global over-supply.

"Falling global demand and rising US stockpiles have helped turn oil charts very bearish, but that may not last as tensions remain high in the Persian Gulf," Edward Moya, senior market analyst at OANDA in New York, said in a note.