WEB DESK: Brent crude surged to $85.72, while WTI approached $80 on Wednesday, as fears grew over disruptions in the Strait of Hormuz amid escalating Middle East hostilities.
Oil prices gained further momentum after President Donald Trump reinstated a naval blockade on all Iranian ports, and Iran responded with strikes on U.S. infrastructure in the region. Brent futures increased by 99 cents, or 1.2%, reaching $85.72 per barrel at 0400 GMT. Meanwhile, West Texas Intermediate (WTI) futures rose by 64 cents, or 0.8%, to $79.98.
On Tuesday, oil prices closed up 2%, touching a one-month high, driven by attacks that intensified concerns over supply disruptions in the strategic Strait of Hormuz, a critical passage for approximately 20% of global oil and liquefied natural gas shipments prior to the recent US-Israeli tensions with Iran.
Priyanka Sachdeva, senior market analyst at Phillip Nova, cautioned that although the physical oil market remains sufficiently supplied, any further escalation involving the Strait or additional sanctions targeting Iranian exports could rapidly tighten markets and increase risk premiums.
Early Wednesday, the U.S. launched a new series of strikes aimed at degrading Iranian capabilities related to attacks on commercial shipping in the Strait of Hormuz, according to the military. Iran has claimed to have closed the strait once again after last week’s hostilities reignited, threatening an already fragile ceasefire established in June after months of conflict.
President Trump told Fox News on Tuesday night that energy targets would ultimately be hit, saying, “I’ll save the energy targets for last.” Meanwhile, Iran’s military announced it had launched drone attacks against U.S. positions at Jordan’s Azraq base, though no official comment has been made by the Pentagon. Iran’s Islamic Revolutionary Guard Corps also claimed to have targeted weapons and storage facilities in Bahrain and Kuwait, but these reports could not be independently verified by Reuters.
The recent flare-up has cast doubts on the effectiveness of the recent memorandum of understanding, signed last month, in establishing a lasting ceasefire, as regional tensions threaten to escalate further.
Tim Waterer, chief market analyst at KCM Trade, noted that if hostilities continue to intensify and damage Gulf energy infrastructure, there is a significant risk oil could surge towards $100. However, if diplomatic efforts succeed in reopening the Strait, Brent prices could stabilize around $75 to $80 per barrel.
