Oil prices rose a second day after the US military strikes on Iran, as Iran announced it would halt all ship traffic through the Strait of Hormuz in response, further straining the fragile ceasefire.
Brent crude jumped more than 2% to surpass $95 a barrel, while West Texas Intermediate advanced to nearly $93, before retreating from its gains after the US military announced the end of its brief campaign. President Donald Trump accused Tehran of obstructing negotiations on an interim peace agreement and warned of further strikes in an interview with Fox News if a deal is not reached.
Earlier, the US military denied Iran's claim that the Strait of Hormuz was completely closed, asserting that commercial vessels were still transiting the waterway. State-run Press TV reported that Iran targeted two ships attempting to pass through the strait, while drones targeted the US Fifth Fleet in Bahrain.
The new US attacks follow airstrikes on Tuesday in retaliation for the downing of a US helicopter off the coast of Oman. The renewed hostilities threaten to prolong the near-total closure of the Strait of Hormuz, which has disrupted supplies of crude oil, fuel, and natural gas since the war began in late February.
The war is caught between the momentum of diplomacy and the spiral of escalation.
Jorge León, head of geopolitical analysis at the consultancy Rystad Energy, said: “The next few days will be crucial in determining whether diplomacy can regain momentum or whether the conflict will spiral into a prolonged escalation.” He added: “Oil price volatility is likely to remain high until there is clearer evidence that the ceasefire is holding.”
U.S. Central Command announced it had conducted additional defensive strikes in response to Iran's unprovoked and ongoing aggression. Trump told Fox News he spoke with high-ranking Iranian officials on Wednesday, who asked him to halt the bombing. However, Iranian media reported that authorities in Tehran denied any direct talks with the U.S. president.
Late Wednesday, Trump claimed in a social media post that the U.S. military had supported the passage of more than 200 commercial vessels through the Strait of Hormuz, bringing more than 100 million barrels of oil to market. The basis for his claim is unclear. Trump also stated that the United States, not Iran, controls the strait. Both countries have implemented a blockade.
Oil flows remain well below pre-war levels, despite some oil leaving the Arabian Gulf under cover of darkness, with some market signs pointing to ample supply. Nevertheless, disruptions to Middle Eastern shipments have driven up energy prices, including US retail gasoline, and raised concerns about slowing economic growth.
U.S. government data released Wednesday showed that crude oil inventories fell by 7.2 million barrels last week, marking the seventh consecutive week of declines. Supplies at Cushing, Oklahoma, also decreased slightly.
