Oil climbs over 2% on Wednesday

Oil prices rose more than 2 per cent on Wednesday after the United States launched airstrikes against Iran and reimposed sanctions on Iranian crude sales, fuelling concerns that the fragile ceasefire between the two countries could collapse and disrupt Middle East oil supplies.

Brent crude futures gained $1.92, or 2.6 per cent, to $76.08 a barrel by 0400 GMT, while US West Texas Intermediate (WTI) crude rose $1.82, or 2.6 per cent, to $72.26 a barrel. Both benchmarks had already climbed about 3 per cent on Tuesday after Washington revoked the general licence allowing the sale of Iranian crude following attacks attributed to Iran.

The US said the airstrikes were carried out in response to attacks on three commercial vessels transiting the Strait of Hormuz, renewing concerns over the security of the key shipping route, which handled around one-fifth of global energy supplies before the conflict began in February.

Market analysts said the latest escalation has increased the risk of further supply disruptions, particularly if tanker traffic through the Strait remains well below pre-war levels. The renewed tensions have also prompted traders to reassess expectations of increased Middle East oil supplies, which had driven prices lower after the US and Iran agreed to a truce last month.

Meanwhile, US crude oil inventories declined again last week, according to market sources citing data from the American Petroleum Institute, adding further support to oil prices. Analysts had expected stockpiles to fall by about 2.4 million barrels in the week ended July 3.

Attribution: Reuters