ISLAMABAD: Oil prices surged on Wednesday after the United States reimposed a naval blockade on Iranian ports and launched a fresh wave of strikes against Iranian military targets, heightening concerns over crude supplies from the Middle East as hostilities around the Strait of Hormuz continued.
Brent crude futures rose 2% during the session before trimming some gains, while US West Texas Intermediate (WTI) also advanced.
Brent was trading at $84.91 a barrel by 1214 GMT, up 18 cents, or 0.2%, while WTI gained 26 cents, or 0.3%, to $79.60 a barrel, according to Reuters. Earlier in the day, Brent had climbed to $86.44 a barrel and WTI to $80.77.
The gains followed a 2% rise on Tuesday, when oil settled at its highest level in a month after renewed attacks disrupted shipping through the Strait of Hormuz, a strategic waterway that handled around one-fifth of the world’s oil and liquefied natural gas exports before the conflict escalated.
US reimposes blockade
The latest rally came after Washington reinstated a naval blockade on ships entering and leaving Iranian ports and launched overnight strikes against Iranian military targets near the Strait of Hormuz.
The US military said on Wednesday it had begun a new round of strikes targeting Iranian coastal defence systems, cruise missile launch sites and military infrastructure.
Also Read: Iran Announces Closure of Strait of Hormuz Until US Ends ‘Aggression’
It said the operations were intended to further degrade capabilities that Iranian forces had used to attack commercial shipping in the strategic waterway.
The fresh strikes followed seven hours of US attacks late on Tuesday on dozens of military targets near the Strait of Hormuz and along Iran’s coastline, according to the US military.
Meanwhile, US President Donald Trump also signalled further military action against Iran.
“I’ll save the energy targets for last, but ultimately we’ll hit energy targets,” Trump told Fox News in an interview broadcast on Tuesday night.
The renewed confrontation comes after hostilities between Iran and the United States flared again last week, undermining a ceasefire reached in June following months of fighting.
Supply concerns support prices
Market participants said fears over supply disruptions were supporting oil prices despite some investor caution.
“The US naval blockade of ships coming/going to Iranian ports is tightening the oil market, considering that Iranian crude exports were around 1.5 million to 2 million barrels per day in the last two weeks,” UBS analyst Giovanni Staunovo told Reuters.
Goldman Sachs estimated that Gulf energy exports had recovered to more than 80% of pre-war levels following the Islamabad memorandum of understanding reached between the US and Iran in June. However, the bank said exports had since slipped below 50%, or around 11 million barrels per day, over the past week.
The bank warned that Brent crude could exceed $110 a barrel during the fourth quarter if the recovery in Gulf exports continued to stall.
