Oil prices rose nearly 3% on Wednesday after the US military launched fresh strikes on Iran and Washington revoked a licence for Iranian oil sales following attacks on commercial vessels in the Strait of Hormuz. The move revived concern that renewed hostilities could disrupt one of the world’s most important energy corridors.
USOIL – 6 Months Chart
Market Snapshot
Brent crude futures (LCOc1) climbed 2.8% to $76.25 a barrel in early Asian trade. US West Texas Intermediate crude (CLc2) rose 2.8% to $72.28.
The gains reversed some of the weakness seen after OPEC+ agreed at the weekend to raise August output. The reaction showed traders were again adding a risk premium for Middle East supply, even as broader market signals point to improving availability and uneven demand.
Event Details
US Central Command said American forces struck Iranian military targets after three commercial ships were hit while transiting near the Strait of Hormuz. AP reported the strikes hit more than 80 targets, including air defence systems, radars and more than 60 small boats used by Iran’s Revolutionary Guard.
The United States also revoked a licence that had allowed sales of Iranian oil under an interim arrangement aimed at ending the conflict and reopening shipping routes. Washington said the attacks on tankers were unacceptable. Iran’s Foreign Ministry condemned the US move as a breach of the interim deal.
One tanker caught fire after being hit off Oman, the UK Maritime Trade Operations centre said. Two other ships sustained damage but continued their voyages, with no injuries reported.
Trading Reaction
The oil rally overshadowed the supply signal from OPEC+, where Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman agreed to lift August output by a combined 188,000 barrels per day. It was the group’s fifth consecutive monthly increase.
That planned supply may limit sustained price rises if the waterway stays open. But traders said insurance costs, route clarity and the risk of further retaliation could outweigh paper supply increases if shipowners avoid the channel.
In Wednesday commentary, OCBC analysts said, “A return to full-scale US-Iran conflict appears unlikely given growing US political pressure to keep oil prices contained ahead of the November midterm elections.”
Outlook
Traders will watch whether ship traffic continues through the Omani route, whether Iran or US forces escalate, and whether changes to sanctions remove more Iranian barrels from the market.
The next signals are likely to come from insurance rates, tanker tracking data, US-Iran diplomatic statements and OPEC+ compliance ahead of the group’s next meeting on August 2.
