Oil prices extended their gains on Wednesday after tensions between the United States and Iran escalated again, raising fresh concerns about global crude supplies and shipping through the Strait of Hormuz.
Brent crude rose $1.46, or 1.72 percent, to $86.19 a barrel in early trade, while US West Texas Intermediate (WTI) gained $1.11, or 1.4 percent, to $80.40 a barrel.
The gains came after both benchmarks surged about 2 percent on Tuesday, reaching their highest closing levels in around a month. Brent settled at its strongest level since June 12, while WTI recorded its highest close since June 15.
Markets reacted after US President Donald Trump announced a naval blockade on all Iranian ports, while Iran responded with attacks targeting US infrastructure and military positions across the region.
The US military also confirmed it had launched another round of strikes aimed at reducing Iran’s ability to attack commercial shipping in the Strait of Hormuz. Tehran, meanwhile, said it had once again shut the vital waterway after fighting with Washington resumed last week, despite a fragile truce reached in June.
The Strait of Hormuz is one of the world’s most important energy routes, with about one fifth of global oil and liquefied natural gas shipments passing through it before the conflict began. Any prolonged disruption is expected to tighten supplies and keep prices under pressure.
Iran’s army said it carried out drone attacks on a US base in Jordan, while the Islamic Revolutionary Guard Corps claimed it had targeted weapons and storage facilities in Bahrain and Kuwait. The reports could not be independently verified.
Analysts said the market is now pricing in a higher geopolitical risk premium.
Tim Waterer, chief market analyst at KCM Trade, said oil could move back towards $100 a barrel if the conflict intensifies and damages energy infrastructure in the Gulf. However, he added that prices could return to the $75 to $80 range if diplomatic efforts succeed in reopening the Strait of Hormuz and easing tensions.
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