Oil extends gains on Wednesday

Oil prices extended gains on Wednesday after US President Donald Trump reimposed a naval blockade on all Iranian ports and Iran launched fresh attacks on US infrastructure in the region, raising concerns over global energy supplies.

Brent crude futures rose 58 cents, or 0.7 per cent, to $85.31 a barrel by 0630 GMT, while US West Texas Intermediate crude gained 35 cents, or 0.4 per cent, to $79.69 a barrel. The gains followed a 2 per cent jump on Tuesday, when both benchmarks closed at their highest levels in a month.

Market sentiment remained supported by fears of further disruption in the Strait of Hormuz, a key shipping route for global oil and Liquefied Natural Gas (LNG), after renewed hostilities between Washington and Tehran.

The US military said it had launched a fresh round of strikes targeting Iranian capabilities used to attack commercial shipping in the Strait of Hormuz. Meanwhile, Iran said it had launched drone attacks on US positions in Jordan and targeted military facilities in Bahrain and Kuwait.

Analysts said the physical oil market remains adequately supplied for now. Still, they warned that any further escalation in the Strait of Hormuz or additional sanctions on Iranian oil exports could tighten market conditions and increase risk premiums.

Attribution: Reuters