Media365
Oil prices climbed sharply on Thursday, extending gains in post-settlement trade after the United States launched a fresh wave of military strikes against Iran, intensifying fears of a wider conflict in West Asia and raising concerns over disruptions to global crude supplies through the Strait of Hormuz.
Brent crude futures settled more than 5 per cent higher at $78.02 a barrel, their highest closing level in more than two weeks, before climbing further to $79.28 in after-hours trading. US West Texas Intermediate (WTI) crude also surged over 5 per cent to settle at $73.52 a barrel and later rose to $74.76.
The rally came after the US military’s Central Command confirmed it had begun fresh strikes on Iranian targets aimed at ensuring freedom of navigation through the Strait of Hormuz, one of the world’s most strategically important oil chokepoints.
The latest military action followed renewed warnings from US President Donald Trump, who said earlier in the day that Iran could face another round of attacks as soon as Wednesday night. Trump also declared that the interim agreement that had temporarily halted hostilities between Washington and Tehran was “over”, although he stopped short of signalling a full-scale war.
Fresh strikes deepen conflict
According to US officials, Thursday’s strikes were expected to be larger than those carried out a day earlier. Iranian state media reported explosions in Bandar Abbas, Abu Musa, Bushehr and several other locations across southern Iran shortly after the attacks began.
The escalation comes after Iran was accused of attacking commercial vessels transiting the Strait of Hormuz on Tuesday, prompting Washington to revoke sanctions relief that had allowed limited Iranian oil sales under last month’s interim understanding.
Iran said on Wednesday it had struck US military facilities in Bahrain and Kuwait, triggering retaliatory American strikes.
Speaking to reporters aboard Air Force One, Trump described the latest US attacks as “retribution” for the alleged Iranian attacks on merchant shipping.
“Every time they hit us, we’re gonna hit them 20,” Trump said, while adding that Iran had contacted Washington seeking a new deal after the latest military action.
“They want to make a deal so badly,” Trump said, although he questioned whether Tehran could be trusted to honour any agreement.
Strait of Hormuz back in focus
The latest escalation has once again brought the Strait of Hormuz into focus, a narrow waterway connecting the Persian Gulf to global markets through which roughly one-fifth of the world’s oil supply normally passes.
Before the outbreak of the Iran conflict earlier this year, around 20 per cent of global crude shipments moved through the strait each day, making it one of the world’s most critical energy transit routes.
Iran has long viewed its geographic control over the waterway as one of its strongest strategic advantages during periods of confrontation with the United States and its allies.
Following attacks on two oil tankers earlier this week, maritime authorities raised the security threat level for vessels passing through the Strait of Hormuz to “severe”, increasing concerns among energy traders over potential supply disruptions.
Any prolonged disruption to shipping through the corridor could tighten global oil supplies and push crude prices significantly higher.
Markets react to geopolitical risks
Oil traders have increasingly built a geopolitical risk premium into prices as the conflict between Washington and Tehran has intensified over recent days.
While there has been no confirmed disruption to oil exports from major Gulf producers so far, markets remain highly sensitive to developments involving the Strait of Hormuz, given its importance to crude exports from Saudi Arabia, Iraq, the United Arab Emirates, Kuwait and Qatar.
The fresh rally also reversed part of the decline seen after the brief ceasefire agreed under last month’s memorandum of understanding between the US and Iran.
Retail fuel markets have already begun responding to higher crude prices, with US gasoline prices edging up to around $3.80 per gallon after falling during the temporary pause in hostilities.
