Oil prices jump over 2% as US action against Iran fuels supply concerns

Global oil prices climbed by more than two percent on Wednesday after fresh US military strikes against Iran and tighter sanctions on Iranian crude exports reignited concerns over the stability of the Middle East

LONDON: Global oil prices climbed by more than two percent on Wednesday after fresh US military strikes against Iran and tighter sanctions on Iranian crude exports reignited concerns over the stability of the Middle East and the security of global energy supplies.

The latest developments unsettled energy markets, with investors fearing that the fragile understanding between Washington and Tehran could deteriorate further, potentially disrupting oil shipments through one of the world’s most critical maritime trade routes.

Brent crude futures rose $1.92, or 2.6 percent, to $76.08 per barrel, while US West Texas Intermediate (WTI) crude gained $1.82, also 2.6 percent, to trade at $72.26 per barrel.

The rally followed a strong performance in the previous session, when both international oil benchmarks advanced by around three percent after the United States revoked a general licence that had allowed the sale of Iranian crude, intensifying pressure on Tehran.

Market analysts said the latest US measures have added a fresh layer of uncertainty to the global energy outlook. Although the sanctions may not immediately reduce global supply, they have significantly increased concerns about the future of US-Iran relations and the possibility of further disruptions in the region.

According to commodity strategists, the policy shift has strengthened fears that recent diplomatic progress between the two countries could unravel, encouraging traders to factor greater geopolitical risk into oil prices.

The US military confirmed that its latest airstrikes were carried out in response to attacks on three commercial vessels passing through the Strait of Hormuz, one of the world’s busiest oil transit corridors.

Energy market experts warned that the recent incidents have highlighted the vulnerability of shipping routes in the Gulf. They noted that any sustained disruption to tanker movements through the Strait could tighten global oil supplies and provide continued support for higher crude prices.

Analysts also observed that many investors had previously built large short positions in oil futures after prices retreated to pre-conflict levels following last month’s ceasefire agreement between the United States and Iran. The renewed escalation has forced traders to reassess expectations of abundant Middle Eastern oil supplies.

Although Iran has denied responsibility for the attacks on commercial vessels, regional tensions have continued to rise. Qatar blamed Iran for attacks that reportedly targeted several ships, including a Qatari liquefied natural gas tanker that caught fire after being struck by a drone.

Maritime security sources also reported damage to a Saudi-flagged crude oil tanker near Oman. The exact cause of the incident has not yet been confirmed, further adding to uncertainty surrounding shipping security in the Gulf.

The Strait of Hormuz remains one of the world’s most strategically important waterways, handling nearly one-fifth of global energy shipments before the conflict erupted earlier this year. Any disruption to traffic through the route is closely monitored by global markets due to its potential impact on oil prices and supply chains.

Reports indicate that Iran has instructed vessels to navigate closer to its coastline, while the United States has reiterated that international shipping through the Strait must remain open and unrestricted.

Meanwhile, global supply concerns were reinforced by fresh data from the American Petroleum Institute (API), which showed that US crude oil inventories declined again last week. Market analysts surveyed by Reuters had expected stockpiles to fall by approximately 2.4 million barrels during the week ending July 3, indicating continued strength in oil demand.