LONDON: Global oil prices climbed more than 2% on Wednesday after the United States launched airstrikes against Iran and reimposed sanctions on Iranian crude exports, heightening concerns that the fragile US-Iran truce could collapse and disrupt energy supplies from the Middle East.
Brent crude futures rose $1.92, or 2.6%, to $76.08 per barrel, while US West Texas Intermediate (WTI) crude gained $1.82, or 2.6%, to $72.26 per barrel by 0400 GMT.
The rally follows a nearly 3% jump in both benchmarks on Tuesday after Washington revoked the general licence that had temporarily allowed the sale of Iranian crude, a move taken in response to recent Iranian attacks.
Analysts at ING said the decision does not significantly alter current oil market fundamentals but has sharply increased geopolitical risk.
“While the revocation doesn’t fundamentally change oil market dynamics, it is significant from a market sentiment perspective. It raises the risk of the temporary US-Iran agreement breaking down,” ING commodity strategists noted.
The US military said its airstrikes were launched in retaliation for Iranian attacks on three commercial vessels transiting the Strait of Hormuz. The latest escalation has once again placed the world’s most critical energy shipping route under the spotlight.
Saul Kavonic, Head of Research at MST Marquee, said the renewed conflict serves as a reminder of the vulnerability of maritime trade through the Strait of Hormuz.
“The market had been expecting an oversupply of oil following the ceasefire, but these developments may force traders to reassess those expectations. If tensions persist and vessel traffic remains below half of pre-war levels, supply constraints could continue supporting higher prices,” he said.
Following last month’s US-Iran truce, oil prices had retreated to pre-conflict levels as traders anticipated increased Middle Eastern supply, leading to a build-up of short positions in crude futures.
However, recent attacks on commercial shipping have reversed market sentiment. Although Iran denied responsibility, Qatar blamed Tehran for attacks that included a drone strike on a Qatari LNG tanker, which caused a fire in its engine room.
Separately, a Saudi-flagged crude oil tanker, believed to be the supertanker Wedyan, was reportedly damaged off the coast of Oman, although the exact cause remains under investigation.
The Strait of Hormuz, which handles nearly one-fifth of global energy shipments, has remained under heightened security since the conflict erupted in February. Iran has reportedly instructed vessels to use shipping lanes closer to its coastline, while the United States has insisted that international navigation through the strategic waterway must remain unrestricted.
The ongoing tensions have prompted many countries to draw down strategic oil inventories to offset supply shortages.
Meanwhile, US crude inventories also declined for a second consecutive week, according to market sources citing data from the American Petroleum Institute (API). Analysts surveyed by Reuters had forecast a drawdown of approximately 2.4 million barrels for the week ended July 3, further lending support to oil prices.
By Reuters
