Oil prices surge nearly 5% as US-Iran conflict reignites

Global oil prices surged nearly 5 percent Wednesday as renewed armed conflict between the United States and Iran stoked fresh fears over crude supply disruptions through the Strait of Hormuz. Brent crude climbed to its highest level since June 19.

September-delivery Brent crude closed up 5.20 percent at $78.02 a barrel on the ICE Futures Exchange on Wednesday, while August-delivery West Texas Intermediate settled 4.37 percent higher at $73.52 a barrel on the New York Mercantile Exchange.

The settlement marked the highest close for Brent since June 19 and for WTI since June 22.

Prices rose as the resumption of US-Iran military hostilities revived concerns about supply disruptions at the Strait of Hormuz, a critical chokepoint for global crude shipments.

After three vessels transiting the strait came under attack on Monday and Tuesday, the US launched airstrikes on Iran. Iran retaliated by striking US military bases in Kuwait and Bahrain.

The Joint Maritime Information Center, a US-led body, raised the risk rating for ships passing through the Strait of Hormuz to "Serious" — higher than the previous level.

Washington's decision to rescind sanctions relief on Iranian oil trade added further to supply concerns.

US President Donald Trump said the ceasefire memorandum of understanding reached with Iran appeared to be "done" and called dealing with Tehran "a waste of time." He added that the US would "strike again hard" Thursday night, naming Iranian power plants and seawater desalination facilities as potential targets, and suggested a maritime blockade could be reimposed.

Trump later tempered those remarks, saying he did not think "the war is going to start again" and that the US was "not looking for a long war," pulling prices back somewhat from their intraday high.

Markets expect oil price volatility to persist for now as geopolitical risks have come back into focus.

"The honeymoon phase is over," said Dan Pickering, chief investment officer at Pickering Energy Partners. "The market is repricing the fact that war risk has still not been resolved."

However, experts said a rapid spike back to the wartime highs was unlikely in the near term, given that Gulf oil producers have recently pumped hundreds of millions of barrels into the market, The New York Times reported.