Oil prices rose during Wednesday's Asian trade, extending the previous session's sharp gains as concerns over supply disruptions intensified after the United States and Iran exchanged fresh strikes overnight, further dimming hopes of a quick easing of Middle East tensions.
By 3:50 pm AEST (5:50 am GMT), Brent crude futures rose 88 cents, or 0.9%, to US$95.53 per barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 51 cents, or 0.6%, to US$90.73 per barrel.
The U.S. said it had launched a series of airstrikes against targets in Iran overnight, prompting a response from Tehran in the most serious escalation between the two countries in weeks.
Iran's Islamic Revolutionary Guard Corps (IRGC) said the U.S. attacks would further restrict traffic through the Strait of Hormuz.
The IRGC also said it had targeted a U.S. military base in Jordan with ballistic missiles, claiming a large number of U.S. forces had been killed.
Iranian state media separately reported a large-scale drone attack on a U.S. base in Bahrain in response to the American strikes.
Jordan's military said its air defences intercepted 10 of 13 ballistic missiles that entered its airspace, while two U.S. officials said no American casualties had been reported from the attacks.
Kuwait also said its armed forces were responding to hostile drone activity.
ING commodities strategists commented in 'The Commodities Feed':
"Developments in recent days brought risks to regional oil supplies back into focus. We’ve seen oil flow through the Strait of Hormuz despite the stalemate between the U.S. and Iran, but rising tensions clearly put crossings at risk.
"The U.S. energy secretary said 17m barrels of oil flowed through the strait on Monday, the highest volume since the conflict began. When you factor in bypass volumes, it suggests Persian Gulf oil flows are above pre-war levels.
"But these numbers are uncertain. Ship trackers have been estimating much more modest flows. It makes more sense to look at average flows over longer periods, rather than a single day, given flows move lots day to day."
The latest exchange followed a flare-up in hostilities over the weekend, the first since July, and came after two tankers departing the Strait of Hormuz were attacked on Monday. The incidents added to supply disruptions and forced traders to seek alternative crude shipments.
Meanwhile, data from the American Petroleum Institute (API) showed that crude inventories fell by 2.6 million barrels in the week ended August 28, compared with market expectations for a decline of 0.8 million barrels.
