Oil Prices Rise After Iran Attacks Commercial Vessels

Crude oil prices rose on Wednesday, extending gains from earlier this week after the United States and Iran exchanged military strikes following Iran’s attacks on three commercial vessels off the Omani coast.

At the time of writing, Brent crude was trading at $78.37 a barrel, while U.S. West Texas Intermediate crude was at $74.30 a barrel.

The gains followed reports that Iran had struck three vessels near the Strait of Hormuz: a Qatari LNG carrier, a Saudi oil tanker and a Liberian-flagged oil tanker.

Iranian media said the LNG carrier had been struck after “ignoring repeated warnings.”

In response, the United States launched strikes on multiple targets in Iran, including “air defence systems, command and control networks, coastal radar sites, anti-ship missile capabilities, and more than 60 Islamic Revolutionary Guard Corps small boats in and near the strait to degrade Iran’s ability to continue attacking international commerce flowing through the international trade corridor,” U.S. Central Command (CENTCOM) said.

Iran retaliated by striking U.S. military bases in Bahrain and Kuwait, underscoring the fragility of the ceasefire agreed by the two sides last month.

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“The current conflagration is a reminder to the market of how fragile passage through the Strait still is,” MST Marquee Head of Research Saul Kavonic told Reuters.

“This presents a contrary indicator to the prevailing sentiment that the market could be flooded into oversupply, which may scare some of the record short positioning to cover,” he added.

Meanwhile, rhetoric between the United States and Iran remained tense. U.S. President Donald Trump earlier this week said the United States would either reach a deal with Iran or “finish the job.” Iran’s Foreign Minister Abbas Araghchi said negotiations on a final peace agreement “will not commence if threats continue.”