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(Bloomberg) — Oil jumped as the US launched a wave of strikes against Iran in retaliation for a spate of attacks on shipping in the Strait of Hormuz.
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West Texas Intermediate surged above $72 a barrel, while Brent closed near $74. US forces have begun “powerful strikes” to impose heavy costs for attacks on shipping, US Central Command said in a social-media post. Explosions were heard on an island close to the strait, Iranian news agency Mehr reported, and Deputy Foreign Minister Kazem Gharibabadi said Tehran would respond.
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The US Treasury also revoked a sanctions waiver that had allowed Tehran to sell oil, reversing course on a key element of the interim peace deal agreed with the Islamic Republic. Three ships were attacked in the waterway, including a gas carrier and a Saudi oil tanker, meaning Tuesday saw the largest volume of incidents since the agreement came into effect last month.
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Oil’s rebound, after futures had plunged in the second quarter as regional tensions cooled, threatens a new wave of disruption for global energy markets. The attacks — both against commercial vessels and the US reprisals — stand to dissuade shipowners and regional producers from attempting transits of Hormuz, which links Persian Gulf suppliers to global markets.
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Ahead of the latest incidents, banks including Goldman Sachs Group Inc. had warned the crude market risked flipping back to a surplus as regional producers scrambled to restore crude output and traffic through the strait picked up. In addition, OPEC+ had pressed on with a rollback of supply curbs.
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The latest flare-up is “a reminder to the market of how fragile passage through the strait still is,” Saul Kavonic, senior energy analyst at MST Marquee. “This is contrary to prevailing sentiment that the market could be flooded into oversupply and could scare some of the record short-positioning to cover,” he added, referring to traders potentially closing out bets on lower prices.
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Control of Hormuz — which in peacetime used to handle about a fifth of the daily global trade in oil — is one of the main points of disagreement between Washington and Tehran. On Tuesday, Iran told the United Nations’ shipping agency that it has authority over parts of the waterway.
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Separately, a US industry report showed a modest draw of crude oil in nationwide stockpiles, including at the key hub in Cushing, Oklahoma. Official figures are due later on Wednesday.
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