Oil Prices Surge as US Airstrikes on Iran Renew

SadaNews - Oil prices surged again as the United States launched airstrikes on targets in Iran for the second day, heightening risks to energy supplies from the region.

Brent crude rose by up to 1.5%, surpassing $79 per barrel, while West Texas Intermediate traded near $74 per barrel.

Brent contracts rose by more than 5% at the close of trading yesterday, ending at $78.02 per barrel, after briefly exceeding $80 during the session.

These moves come after the US Central Command announced that the military conducted additional strikes to undermine Iran's ability to threaten freedom of navigation in the Strait of Hormuz.

For his part, US President Donald Trump stated that the temporary peace agreement with Iran has ended and hinted at the possibility of reimposing a blockade on Iranian ports. He also warned of a potential rise in crude oil prices further and indicated that the strikes could involve "taking control" of the export hub on Qeshm Island. Iran threatened to close the Strait of Hormuz again in response to these actions.

In this context, Trump noted in a social media post that the US attacks were "retaliation" for Iranian attacks on ships. He wrote: "If this happens again, it will be much worse!", which seemed to outline the limits of US strikes.

Bloomberg cited Scott Shelton, an analyst at TP ICAP, saying, "If we return to closing the Strait of Hormuz, prices are likely to rise another $10, but if oil flows continue, it is unlikely that prices will rise much further."

Iranian Attacks Targeting Regional Countries

Iran stated it would launch widespread attacks in response to the US strikes. On Thursday, Kuwait and Bahrain reported Iranian targeting attempts using missiles and drones.

The Kuwaiti army confirmed that air defenses intercepted Iranian missiles and drones, and the General Staff of the army requested that people avoid areas where debris from the interceptions might fall.

In Bahrain, the country announced the activation of sirens twice, urging citizens and residents to seek safe places.

For its part, the Qatari Ministry of Interior confirmed that the security threat level is high, urging everyone to stay in homes and safe places, before declaring the threat ended.

The Strait of Hormuz Returns to the Heart of Risks

The new strikes come at a time when global energy markets remain highly sensitive to any potential disruption in the Strait of Hormuz, which connects major OPEC producers in the Arabian Gulf to global markets.

Analysts at ANZ Group Holdings, including Daniel Hynes, wrote in a note that "the events of the past 48 hours have raised concerns that any collapse of the temporary peace agreement between the United States and Iran will lead to renewed disruptions in oil supplies."

They added: "Before the attack on three ships earlier this week, transits through the main waterway were on the rise. Now, the recovery of supplies is at risk of complete halt as Iran seeks to assert control."

Before the spike in tensions, the US Treasury Department revoked a sanctions waiver that allowed Tehran to sell oil, undermining a key component of the temporary agreement between the two sides and increasing pressure on the market. The waiver had previously facilitated the flow of millions of barrels of Iranian crude out of Gulf waters, before much of its fate became uncertain after the US decision.

The pressures are not confined to the crude oil market alone. Refined products have also extended their upward wave, with diesel prices jumping by as much as 14%, coinciding with Russia's ban on diesel exports and continuing pressure on global refining capacity.

These developments complicate decisions for shipowners and regional producers regarding transit through the Strait of Hormuz, especially after Iran informed the United Nations shipping agency that it has the right to control "parts" of the strait, raising the stakes at one of the world's most critical energy chokepoints.

Stocks Under Pressure

As the conflict continues, stocks are under pressure. While US commercial crude inventories increased by about 3 million barrels last week, the withdrawal of 6.2 million barrels from the Strategic Petroleum Reserve led to an overall inventory decline of more than 3 million barrels, according to official data.

Additionally, distillate fuel oil stocks fell by 5 million barrels, and gasoline stocks hit their lowest seasonal level since 2012.

Henry Hoffman, co-director of the Catalyst Energy Infrastructure Fund, told Bloomberg that "the US Strategic Petroleum Reserve is raising increasing concern as well," adding: "We have continued to draw from strategic inventories during the ceasefire, leaving less safety margin if this escalation continues."