Live updates: Follow the latest news on the US-Iran war
Oil prices jumped on Wednesday after an Iranian missile attack on American forces and co-ordinated strikes by the US and Saudi Arabia on Iraqi militias, undermining prospects of negotiated peace in the region.
Brent, the benchmark for more than two thirds of global oil, increased as much as 5 per cent as hostilities reignited. While Brent gave up some gains, it was still trading 4.27 per cent higher at $87.68 a barrel at 7.52am UAE time. West Texas Intermediate, the gauge for US oil, rose 4.18 per cent to $82.57 a barrel.
The surge in oil prices follows a 16 per cent drop over the past three sessions, the biggest three-day slump for crude since 2020.
Iran's Islamic Revolutionary Guard Corps said it launched ballistic missiles at an American airbase and a US Central Command facility in Jordan after what it described as "aggressive actions" by the US military against Iran.
The Iranian statement came as Centcom said it thwarted IRGC attacks on American forces in the Middle East, without giving details. Earlier, US and Saudi armed forces conducted "precision strikes" on Iran-aligned groups in Iraq.
The early morning strikes hit "terrorist logistics and weapons sites across eastern Iraq" in what Centcom called a "strong response" to more than 30 drone attacks carried out by those groups on US and Saudi energy infrastructure over the past 72 hours. Saudi Arabia's Defence Ministry said the joint operation was carried out in response to Iraqi militia attacks on the kingdom’s petroleum facilities.
The kingdom "emphasises that it does not seek escalation but will respond to any aggression it faces", the ministry added.
“We remain exceedingly sceptical that we are on the brink of a major diplomatic breakthrough that will resolve the nuclear stand-off that started the war,” Bloomberg quoted RBC Capital Markets analysts, including Helima Croft, as saying in a note. “The ongoing threat of missiles, mines, drones and Tehran tolls will keep a significant portion of the shipping market on the sidelines.”
Crude prices have swung wildly since the beginning of the conflict on February 28. Brent gave up all the war premium earlier this month and traded below the prewar $72-a-barrel mark as the US and Iran worked on a permanent peace deal, after agreeing to a 60-day ceasefire last month.
However, crude prices were pushed higher by Tehran's attacks on ships in the Strait of Hormuz and a subsequent US bombing campaign in Iran that lasted 13 straight nights. Brent gained more than 30 per cent to top the $100 per barrel mark last week, before a sharp retreat after the US and Iran ceased hostilities and sought a negotiated peace.
The latest flare-up threatens to reignite the conflict that has once again embroiled the broader region.
Shipping attacks
The IRGC on Wednesday said its naval forces hit three oil tankers in the strait after they ignored warnings and continued on an “unsafe and illegal” route. In a statement posted on Telegram, the IRGC said it continued to maintain “full control” over the waterway, without identifying the vessels or the flags they sailed under.
The group did not provide details about when or where the tankers were intercepted. It also did not say whether the incidents resulted in any casualties or damage.
Yemen’s Houthi rebels, who said they have launched a blockade of Saudi ports and shipping, claimed to have attacked another Saudi-flagged oil tanker in the Red Sea.
The Yemeni group, which has attacked energy infrastructure in the kingdom in recent days after Saudi strikes on Houthi-controlled territory, said the tanker, NCC Ghazal, turned around under ballistic missile fire after "ignoring warning calls".
The Houthis have already struck oil tankers in the Red Sea and a number of ships have also made U-turns to avoid attacks, choosing the longer and costlier Suez Canal route.
Saudi Arabia, Opec’s biggest oil exporter, has loaded no crude for export through the Bab Al Mandeb strait from the kingdom's western coast since the Houthi "maritime embargo" took effect last week.
Crude oil supply to the kingdom’s Asian buyers from the Suez Canal has more than doubled in the week of the embargo to reach 1.06 million barrels a day, up from the week starting July 13, Kpler data shows.
The Strait of Hormuz, the chokepoint through which 20 per cent of the world’s oil and gas transited before the war, and the Bab Al Mandeb strait are two vital trade routes for global energy supplies.
