Global oil prices surged by more than 5% on Wednesday, reaching their highest levels in two weeks amid rising tensions in the Middle East.
United States President Donald Trump has declared that the MoU aimed at ending the conflict with Iran was “over”, reigniting concerns over potential disruptions to crude supplies from the Middle East.
By 0832 GMT, Brent crude futures had climbed $3.82, or 5.15%, to $77.98 per barrel, while US West Texas Intermediate (WTI) crude gained $3.70, or 5.25%, to trade at $74.14 per barrel.
Global oil prices had already risen around 3% on Tuesday after the US revoked a general licence that had permitted the sale of Iranian crude oil.
Speaking before a NATO summit in Ankara, President Trump said the temporary agreement intended to halt the conflict with Iran had effectively ended, adding that he had no plans to resume talks with Tehran.
Media quoted experts as saying that the latest developments had cast serious doubt over the future of the 60-day negotiation process.
In such a scenario, a price closer to $80 a barrel is more consistent with current market fundamentals than $70, experts believe.
According to US Central Command, Tuesday’s airstrikes were carried out in response to Iranian attacks on three commercial vessels passing through the Strait of Hormuz.
In retaliation, Iran’s Revolutionary Guards claimed responsibility for strikes targeting US military facilities in Bahrain and Kuwait early Wednesday.
According to the reports, four oil and gas tankers had either turned back or chosen not to enter the Strait of Hormuz after Iran announced that only shipping routes approved by Tehran would be considered safe.
Following last month’s truce agreement between the US and Iran, oil prices had retreated to pre-conflict levels as traders increased bearish bets, expecting additional Middle Eastern oil supplies to return to global markets.
Those expectations were overturned after renewed military tensions revived concerns over supply security.
Although Iran denied involvement in the attacks on commercial vessels, Qatar blamed Tehran, including for an incident involving a Qatari liquefied natural gas tanker that was reportedly struck by a drone, triggering a fire in its engine room.
The latest incidents have renewed fears over shipping through the Strait of Hormuz, a vital waterway that previously handled around one-fifth of the world’s energy shipments before hostilities erupted in late February.
