Crude oil prices jump 2% on escalating US-Iran war; Brent crude above $75 per barrel
US-Iran war: Brent crude, the global benchmark, for September delivery gained 1.9% to $75.53 per barrel.
US-Iran war: Oil prices climbed on Wednesday after the United States carried out fresh strikes on Iran in response to Tehran's attacks on commercial vessels transiting the Strait of Hormuz.
US benchmark West Texas Intermediate (WTI) crude for August delivery advanced 2.1% to $71.87 per barrel, while Brent crude, the global benchmark, for September delivery gained 1.9% to $75.53 per barrel.
What's driving crude oil prices today?
The US launched what it described as “powerful strikes” aimed at imposing significant costs for attacks on commercial shipping, according to the US Central Command. Explosions were reported on an island near the Strait of Hormuz, Iran’s Mehr news agency said, while Deputy Foreign Minister Kazem Gharibabadi warned that Tehran would retaliate.
In a separate move, the US Treasury revoked a sanctions waiver that had allowed Iran to export oil, reversing a key provision of the interim peace agreement with Tehran. The escalation followed attacks on three vessels in the strategic waterway, including a gas carrier and a Saudi oil tanker, making Tuesday the busiest day for such incidents since the deal took effect last month.
The heightened tensions also lifted European natural gas prices, with futures climbing as much as 4.9%.
Oil prices rebounded after declining in the second quarter, when easing regional tensions had weighed on crude. The latest attacks on commercial ships, coupled with US military action, are expected to discourage shipping companies and regional oil producers from using the Strait of Hormuz, a crucial route connecting Persian Gulf exporters with global markets.
Before the latest developments, banks such as Goldman Sachs had warned that the crude market could return to a surplus as regional producers ramped up output and shipping activity through the strait recovered. At the same time, OPEC+ continued with its planned rollback of production cuts.
Control over the Strait of Hormuz remains a major point of contention between Washington and Tehran. On Tuesday, Iran informed the United Nations’ shipping agency that it exercises authority over parts of the waterway, which in peacetime handled roughly one-fifth of the world’s daily oil trade.
Meanwhile, Brent crude’s prompt spread shifted back into backwardation—a bullish market structure where near-term contracts trade at a premium to later-dated ones. The spread stood at 23 cents per barrel on Wednesday, reversing from a 25-cent contango, the opposite pricing structure, seen at the beginning of the week.
(With inputs from Reuters)
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