Oil prices continued to rise on Wednesday following a 4.6 per cent surge the previous day as renewed fighting between the US and Iran fuelled concerns about increased disruption through the Strait of Hormuz.
Brent, the benchmark for two thirds of the world's oil, was up 0.87 per cent to $95.47 a barrel at 8.09am UAE time. West Texas Intermediate, the gauge that tracks US crude, was trading 0.55 per cent higher at $90.72 a barrel.
Both benchmarks soared more than $4 on Tuesday, marking their highest gain in more than a month.
US President Donald Trump said on Tuesday that the US was launching “large and powerful” strikes on Iranian targets near the Strait of Hormuz in retaliation for the “Iranians’ failed attempt at adding sea mines to the strait … and the Iranians shooting eight missiles, all successfully knocked down, at our military base in Jordan”.
He also warned of the “biggest attack of them all”, which he said was “waiting in the wings and, when it is over, there will be very little left of the Islamic republic of Iran”.
Iran pledged to respond to the US attacks on the south of the country after acknowledging several targets had been hit.
Kuwait, Jordan and Bahrain sounded alerts and intercepted missiles on Wednesday morning.
“Renewed hostilities in the Middle East sent crude prices surging, driving Wall Street lower and global bond yields to multi-year – and in some instances, multi-decade – highs,” said Kyle Rodda, senior financial analyst at Capital.com.
“The United States ratcheted up strikes on Iran for what it says is retaliation for the attempted laying of new mines in the Strait of Hormuz. Iran pledged reprisal attacks on the US, heightening the risk of deeper and more protracted supply disruptions in Middle East energy exports.”
Crossings through the Strait of Hormuz, a key waterway through which about a fifth of the global oil exports passed before the war began, have dropped in the past few days, according to Kpler data. About five vessels – excluding container ships – crossed the waterway on Tuesday, according to initial data, while 10 crossed on Monday, seven on Sunday and nine on Saturday.
That compares with 23 crossings last Wednesday, 25 on Thursday and 16 on Friday.
“Any perceived threat to Gulf shipping lanes will keep an oil-risk premium in place,” said Daniel Richards, senior economist at Emirates NBD.
