Brent Surpasses $76 After U.S. Strikes on Iran

SadaNews - Oil jumped after the United States launched a wave of strikes against Iran in response to a series of attacks targeting shipping vessels in the Strait of Hormuz, which heightened tensions in the energy-rich region.

Brent crude rose by as much as 3% to exceed $76 per barrel, while West Texas Intermediate crude surpassed $72.

The U.S. Central Command stated that American forces executed strikes on over 80 targets following the attacks on ships. Deputy Foreign Minister Kazem Gharib Abadi warned that Tehran would retaliate. Axios reported that drones were launched towards Bahrain.

The U.S. Treasury Department also revoked a sanctions waiver that allowed Tehran to sell oil, stepping back from a key element of the temporary peace agreement reached with Tehran.

These developments came after three ships were attacked in the waterway, including a gas tanker and a Saudi oil tanker, marking Tuesday as the day with the highest number of incidents since the agreement took effect last month.

European natural gas futures also surged, rising by as much as 4.9%.

Hormuz Brings Energy Risks to the Forefront

The oil upturn, which had seen futures plummet in the second quarter as regional tensions eased, poses the threat of a new wave of disruption in global energy markets.

The attacks, whether against commercial vessels or the U.S. retaliatory strikes, may complicate decisions facing ship owners and regional producers regarding navigation through Hormuz, which links Gulf suppliers to global markets.

According to ship tracking data, several vessels crossed the strait in the hours following the ship attacks. Six loaded supertankers have started or completed their crossings, with most sailing along a U.S.-supported corridor near the Omani coast.

Before these tensions, banks including Goldman Sachs Group warned that the crude market was at risk of returning to a surplus, as regional producers rushed to restore crude output and traffic through the strait increased. The OPEC+ alliance also continued to ease production restrictions.

Sol Kavonick, senior energy analyst at MST Marquee, stated that the escalation "reminds the market how fragile transit through the strait has been so far." He added: "This contrasts with prevailing sentiment that the market could drown in oversupply and may drive some traders to close their record short positions," referring to the possibility of traders closing their bets on declining prices.

Forecasts of Renewed Tensions

Controlling Hormuz is one of the main points of contention between Washington and Tehran. Iran informed the United Nations shipping agency on Tuesday that it has authority over parts of the waterway, which during peacetime handles about one-fifth of global daily oil trade.

Caroline Kwan, associate dean at NYU's Center for Global Affairs, indicated that crude gains should be temporary unless additional attacks occur. She added that the U.S. move "sends a signal to Iran that it cannot act without consequences and cannot risk returning to outright hostilities."

She continued: "This is the new normal, a ceasefire that is not actually a ceasefire, and we will see such events periodically." She added that "markets are already starting to get used to it."

The differential for the nearest Brent contracts has reverted back to a state of "backwardation", an upward pattern where near-term contract prices exceed those for farther-out dates. The differential was 23 cents per barrel on Wednesday, a reversal from 25 cents in a "contango", the opposite structure, observed earlier in the week.