U.S. Strikes on Iran Push Oil Prices Higher Amid Supply Concerns

Oil prices continued to climb on Thursday following reports of fresh U.S. military strikes on targets in Iran. The escalation has intensified fears of a wider conflict that could disrupt crude oil shipping through the Strait of Hormuz, a critical global energy corridor. At one point in early trading, West Texas Intermediate (WTI) futures rose by 1.12% to $74.34 a barrel, while Brent crude futures also gained 1.12%, reaching $78.89 a barrel. The gains followed a surge of over 8% in the previous session after the U.S. president announced an end to a ceasefire.

The recent military action comes after a series of attacks on commercial vessels near the Strait of Hormuz. Incidents involving a Qatari LNG tanker and a Saudi crude tanker, among others, have prompted some shipping operators to delay or reroute their vessels. In response, the U.S.-led Joint Maritime Information Center raised the threat level for shipping in the area to "severe," and the International Maritime Organization advised vessels to use "extreme caution."

Washington stated the strikes were intended to degrade Iran's capacity to threaten commercial shipping. Tehran responded by threatening retaliation against U.S. military assets and reiterated its warning that it could close the Strait of Hormuz to navigation. The renewed hostilities cast doubt on the recent recovery in oil exports from the Persian Gulf, which had been gradually improving since a ceasefire was established last month.

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Analysts note that a geopolitical risk premium is being rebuilt into oil prices as the conflict threatens to disrupt supply. According to a note from ANZ bank, the improving flow of oil through the Strait is now at risk. The market is also being influenced by increasing tightness in refined fuels, driven by extended Russian diesel export restrictions and data showing a significant draw in U.S. distillate and gasoline inventories.