oil price Oil prices rose sharply on Wednesday as fresh tensions between the United States and Iran stoked concerns that global oil supplies could be affected. The latest rise comes in the wake of a U.S. military strike against Iran, adding to concerns that the conflict could escalate. The fighting has put pressure on a fragile ceasefire between the United States and Iran that has previously helped stabilize global oil markets.
Brent crude, the global oil benchmark, rose more than 3% on Wednesday after earlier falling to pre-war levels. Brent crude oil September futures hit $76.48 a barrel as of 06:30 GMT, their highest level since June 23. Brent crude subsequently climbed further, rising nearly 6% to around $78.55 a barrel, CNBC reported.
U.S. crude oil WTI also rose nearly 6% and was trading around $74.50 a barrel. Oil prices typically rise when there are concerns about possible supply disruptions, especially in the Middle East, which produces most of the world’s oil.
What triggered the latest rally?
The United States launched an attack on Iran after three commercial ships were attacked while passing through the Strait of Hormuz. this us Accused Iran of targeting merchant ships. Qatar and Saudi Arabia also blamed Iran for the attack.
The U.S. Central Command said it launched “a series of powerful strikes” to make Iran pay a heavy price for attacking commercial ships carrying innocent civilians. Iran has not yet directly admitted responsibility for the attacks on the ships, Al Jazeera reported. However, Iran has repeatedly warned ships not to use the Strait of Hormuz route without its approval.
Trump says ceasefire is over
US President Donald Trump says he believes the ceasefire with Iran is over. “For me, I think it’s over,” he said at a press conference at the NATO summit in Ankara, Turkey, according to CNBC. He also said he no longer wanted to negotiate with Iran and called further peace talks a “waste of time.”
Sanctions on Iranian oil repatriation
The United States also lifted a temporary exemption that allowed Iran to continue selling oil for 60 days. The exemption was proposed last month as part of broader negotiations between Washington and Tehran. The U.S. Treasury Department said it would no longer allow Iranian oil transactions after July 17, Al Jazeera reported. The new order also halts any new oil purchases or loadings after Tuesday. A U.S. official told CNBC that Iran would only receive such benefits if it showed “good behavior.”
Also read: Why did Bitcoin fall below $63,000? U.S.-Iran tensions and Fed interest rate concerns explained
Iran reacted strongly
Iranian Deputy Foreign Minister Kazem Garibaldi called the U.S. decision a “blatant violation” of the memorandum of understanding signed on June 17. He said that, as Al Jazeera stated, Iran will take “decisive action” to protect its interests and national security.
Iran’s foreign ministry also called the U.S. military strike a “serious violation” of the peace deal reached last month. Iran has warned that its armed forces will defend the country’s sovereignty and security against any U.S. military aggression.
Why the Strait of Hormuz is important
The Strait of Hormuz is one of the world’s most important oil shipping routes. Millions of barrels of oil pass through here every day. A ceasefire agreed last month allowed the strait to reopen to normal commercial shipping after months of disruption. Now, new attacks have once again raised concerns about the safe passage of waterways. The U.S.-led Joint Maritime Information Center raised the threat level to “severe” for ships using the strait, CNBC reported. The agency warned that Iran could take more hostile actions.
Experts interpret risks
IG Australia market analyst Tony Sycamore said via Al Jazeera that the agreement between the United States and Iran has always been vague about who controls the Strait of Hormuz. He said the two countries had never fully agreed on whether the strait was an international waterway or part of Iran’s territorial waters.
Sycamore said it was unclear whether the latest U.S. attack would end the conflict or lead to more Iranian action. He added that markets may remain tight and oil prices may be supported for now.
Saul Kavonic, head of energy research at MST Financial, told Al Jazeera that oil prices are likely to remain high as the situation in the Strait remains dangerous. Kavonich believes Iran hopes to tighten control of the strait in the coming weeks. He warned that this could reduce shipping traffic through the Channel to less than half of pre-war normal levels within months. He also said that periodic conflicts between Iran and the United States may continue during this period.
Ortus Advisors strategist Andrew Jackson said via CNBC that Iran may not rush to reach a deal because its bargaining power vis-Ã -vis the United States is increasing ahead of the U.S. midterm elections. He also noted that rising oil prices could keep inflation high and make it harder for the Federal Reserve to cut interest rates. U.S. 10-year Treasury yields also moved higher as investors reacted to fresh tensions.
Impact on the stock market
Asian stock markets were mixed after the latest developments. Stocks in Tokyo and Seoul fell sharply as investors worried. Meanwhile, markets in Taipei and Hong Kong closed higher despite geopolitical tensions.
Therefore, a new round of US-Iran conflict has once again shaken the global oil market After a brief calm. Military strikes, attacks on commercial ships, new sanctions on Iranian oil and uncertainty over the Strait of Hormuz have all pushed oil prices higher. Experts say markets will be watching closely to see whether the conflict cools down or intensifies further, as any disruption to oil supplies could keep crude prices high for an extended period.
