NEW YORK: Oil prices climbed in early trading Wednesday, building on the previous session’s sharp gains, as overnight military exchanges between the United States and Iran escalated tensions in the Middle East and revived fears of supply disruptions through a critical global shipping chokepoint.
Brent crude futures rose $1.03, or 1.1%, to $95.68 a barrel by 0605 GMT. U.S. West Texas Intermediate crude futures added 61 cents, or 0.7%, to $90.83. Both contracts had surged more than $4 on Tuesday, marking Brent’s largest one-day percentage gain since July 24 and WTI’s since July 23.
The U.S. launched a series of airstrikes against targets in Iran overnight, prompting a response from Tehran, officials said. The exchange represented the most serious escalation between the two countries in weeks.
Iran’s Islamic Revolutionary Guard Corps said the American attacks would further restrict traffic through the Strait of Hormuz, a waterway that carried about one-fifth of globally consumed oil before the conflict and which Iran has effectively closed to commercial shipping.
“Developments in recent days brought risks to regional oil supplies back into focus,” ING analysts wrote in a client note. “We’ve seen oil flow through the Strait of Hormuz despite the stalemate between the U.S. and Iran, but rising tensions clearly put crossings at risk.”
The IRGC also said it targeted a U.S. military base in Jordan with ballistic missiles, claiming to have killed a large number of American forces. Iranian state media reported a large-scale drone attack on a U.S. base in Bahrain in response to the American strikes.
Jordan’s military said its air defenses intercepted 10 of 13 ballistic missiles that entered its airspace. Two U.S. officials, speaking on condition of anonymity, said no American casualties had been reported from the attacks so far.
Separately, Kuwait said its armed forces were responding to hostile drone activity.
The latest violence followed a weekend flare-up, the first since July, and came after attacks on two tankers departing the Strait of Hormuz on Monday. Those incidents caused further disruptions to oil supplies and forced traders to seek alternative crude shipments.
“The oil market is no longer pricing just the risk of war; it is increasingly pricing the cost of an unresolved war,” said Priyanka Sachdeva, head of market insights at Phillip Nova. “Until there is clear evidence that negotiations can produce a lasting resolution and that normal oil flows through the Strait are returning, the risk premium in crude is likely to remain elevated.”
In the U.S., the world’s largest oil producer, crude inventories fell by 2.6 million barrels in the week ended Aug. 28, while distillate stocks, which include diesel and heating oil, declined by 265,000 barrels, according to market sources citing data from the American Petroleum Institute.
