Oil prices extended their gains on Wednesday after renewed military action between the United States and Iran heightened fears of prolonged supply disruptions across the Gulf, pushing both benchmark contracts to their highest levels in more than a month.
Brent crude rose US$1.46, or 1.72%, to US$86.19 a barrel in early trade, while US West Texas Intermediate (WTI) gained US$1.11, or 1.4%, to US$80.40 a barrel.
The latest advance came after both contracts climbed about 2% on Tuesday as concerns mounted over disruptions to shipping through the Strait of Hormuz, a key route that previously handled around one-fifth of global oil and liquefied natural gas shipments before the conflict erupted.
Tensions escalated after US President Donald Trump reinstated a naval blockade on Iranian ports, prompting Tehran to launch retaliatory attacks against US military assets in the region.
The US military said it had also carried out a fresh round of strikes aimed at degrading Iranian capabilities used to target commercial shipping in the Strait of Hormuz. Iran has maintained that the strategic waterway remains closed after fighting between the two countries resumed last week, undermining a fragile ceasefire reached in June.
In an interview with Fox News, Trump said: “I’ll save the energy targets for last, but ultimately we’ll hit energy targets.”
Meanwhile, Iran’s army said it launched drone attacks on US positions at Jordan’s Azraq Air Base, while the Islamic Revolutionary Guard Corps claimed it had targeted weapons and storage facilities in Bahrain and Kuwait. The Pentagon had yet to comment, and Reuters was unable to independently verify the claims.
The renewed hostilities have also cast doubt over whether last month’s memorandum of understanding can still pave the way for a lasting end to the conflict.
Tim Waterer, chief market analyst at KCM Trade, said the risk of oil climbing towards US$100 a barrel remains significant if the fighting damages energy infrastructure across the Gulf.
“The chances of oil moving back toward US$100 in the reasonably near term are still meaningful if hostilities intensify which damages energy infrastructure around the Gulf,” he said.
He added that Brent could trade within the US$75 to US$80 range if diplomatic efforts succeed in reopening the Strait of Hormuz.
“For now, the risk premium is still embedded, but it’s not a one-way bet given that there remain incentives for both sides to find a diplomatic solution,” Waterer said.
