Oil prices significantly increased on Wednesday, with Brent crude futures rising by $4.57, or 6.16%, to $78.73 a barrel, and U.S. West Texas Intermediate (WTI) crude climbing by $4.23, or 6.01%, to $74.67 a barrel. Both benchmarks reached their highest levels since June 22. This surge followed President Donald Trump's declaration that the memorandum of understanding (MOU) to end the conflict with Iran was "over," sparking renewed concerns about the stability of Middle East oil supplies.
The renewed hostilities stem from U.S. airstrikes in response to Iranian attacks on three commercial vessels in the Strait of Hormuz. Iran's Revolutionary Guards retaliated by targeting U.S. military sites in Bahrain and Kuwait. These developments have heightened fears about tanker traffic through the Strait of Hormuz, a critical waterway that accounted for approximately one-fifth of global energy supply before the conflict. Ship-tracking data shows at least four oil and gas tankers have turned back from attempting to transit the strait due to safety concerns.
Analysts are warning of potential market volatility. Ole Hansen, an analyst at Saxo Bank, noted that the market is once again pricing in the risk of renewed attacks on shipping or a broader breakdown in U.S.-Iran relations, which could disrupt oil flows through the Strait of Hormuz. Saul Kavonic, head of research at MST Marquee, echoed this sentiment, suggesting that Trump's assertion about the MOU raises the prospect of the Strait re-closing as an escalatory cycle recommences. Bjarne Schieldrop, chief commodities analyst at SEB, stated that a price closer to $80 a barrel is more consistent with current market fundamentals than $70.
