Oil prices have risen about 1 per cent after renewed fighting broke out between the US and Iran, Reuters reports.
Brent crude futures are up $1.20, or 1.2pc, at $101.26 a barrel as of 0356 GMT. West Texas Intermediate (WTI) US crude futures rose by 85 cents, or 0.9pc, to $95.66 a barrel. The benchmarks were up more than 3pc at market open.
The gains snapped three days of decline on reports this week that the US and Iran were close to agreeing to a peace deal that would end the fighting but put off larger issues around Iran’s nuclear programme. For the week, both contracts are still set to fall about 6pc.
“The market is on the cusp of a complete breakdown. Price formation is no longer anchored in a pragmatic reading of the war’s trajectory or the physical realities in the Strait of Hormuz,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
Earlier, the US Navy targeted an Iranian oil tanker in the Strait of Hormuz on May 7, responding to which Iran has said it will retaliate.
According to Iranian state media, the US targeted an oil tanker in the Strait of Hormuz, to which Iranian forces fired missiles in response, allegedly targeting enemy units.
Explosions were heard on the island of Qeshm near Bandar Abbas, while Tehran activated its air defence system, according to an Al Jazeera report.
According to Iranian official sources, the air defence system has been mobilised in western Tehran and is countering enemy targets.
Iranian military sources say Iran retaliated after an alleged US attack on a tanker in the Strait of Hormuz and fired missiles at enemy units, resulting in no casualties.
On the other hand, there are reports of explosions in Bandar Abbas and Qeshm Island. According to the Mizan news agency, the sounds of explosions were actually the result of air defence operations during the interception of small drones.
According to Tasnim news agency, the air defence system in Bandar Abbas shot down two drones, while Tehran has also fully activated the defence system.
Large numbers of citizens in southern Iran took to the streets in solidarity with the army and Iran after tensions escalated, according to Iranian state media.
Iran has accused the US of violating the ceasefire, saying US actions are reigniting regional tensions.
Read more: US strikes Iranian oil tanker in Strait of Hormuz, Iran vows to respond
