Industry Odisha Bureau, July 8: Global crude oil prices surged over 2 percent on Wednesday after tensions between the US and Iran renewed. This raised fears of supply disruptions in the Middle East. As of 8 AM on Wednesday, Brent crude rose 2.68% to $76.15 per barrel. Meanwhile, US West Texas Intermediate (WTI) crude gained 2.80% to $72.41 per barrel.
The rally came after US airstrikes on Iran in response to attacks on three commercial vessels passing through the Strait of Hormuz. Washington also reimposed sanctions on Iranian crude exports. This sparked concerns that last month’s truce between the two countries may be unravelling.
Saul Kavonic, Head of Research at MST Marquee said that latest developments highlight the continued vulnerability of shipping through the strait. He also added that prolonged disruptions to tanker traffic could keep supporting oil prices.
Oil prices had declined after the US and Iran reached a truce last month. This raised hopes on Iranian crude exports. However, the latest escalation has weakened those expectations.
Reports from Reuters say, both Brent and WTI crude had already gained around 3 percent on Tuesday. This came after the US withdrew the general license that had allowed Iranian crude sales following the attacks on commercial vessels.
Concerns over the shipping safety have also intensified. Qatar also accused Iran of attacking three commercial vessels. This included a Qatari liquefied natural gas tanker that caught fire after being hit by a drone. A Saudi-flagged oil tanker was also damaged off the Oman coast. However, the exact reason for the damage remains under investigation.
Meanwhile, industry data also provided additional support to oil prices. The American Petroleum Institute reported another decline in the US crude inventories last week. Analysts had expected stockpiles to fall by about 2.4 million barrels.
Iran has also accused the United States of violating last month’s ceasefire through military action, renewed sanctions and threats of further strikes.
