Oil prices rose sharply during Thursday's Asian deals after Iran’s Revolutionary Guards said they targeted a United States airbase in response to fresh American strikes near Bandar Abbas airport, escalating tensions in the Middle East and renewing concerns about supply disruptions around the Strait of Hormuz.
By 2:55 pm AEST (4:55 am GMT), Brent crude futures for August delivery had climbed $3.44, or 3.7%, to US$95.69 per barrel. West Texas Intermediate crude futures for July delivery rose $3.45, or 3.9%, to US$92.19 per barrel.
The gains followed a steep sell-off in the previous session, when both benchmarks tumbled more than 5% to their lowest levels in a month amid optimism that the United States and Iran could reach an agreement to end the conflict and reopen the Strait of Hormuz to normal shipping activity.
The latest exchange highlighted the fragile state of negotiations between Washington and Tehran, with major disagreements remaining over sanctions relief, control of the strategic waterway and Iran’s nuclear programme.
Analysts at ANZ said unresolved issues continued to support oil prices despite recent diplomatic efforts.
"Oil supply remains constrained, and key sticking points have yet to be resolved," ANZ analysts said in a note to clients.
"Iran appears determined to see its USD24bn of frozen assets released and wants to maintain control of the Strait of Hormuz. That is a red line for the U.S., with Trump saying that no one nation should control the strait, but the U.S. would ‘watch over it’."
The Strait of Hormuz remains a critical global energy chokepoint, handling roughly one-fifth of the world’s oil and liquefied natural gas shipments before the conflict began.
Concerns over possible disruptions to tanker traffic have driven sharp volatility across energy markets in recent months.
Meanwhile, supply data from the United States also supported crude prices.
The American Petroleum Institute (API) reported that U.S. crude oil inventories fell by 2.8 million barrels last week, marking the sixth consecutive weekly decline in stockpiles.
Official inventory data from the U.S. Energy Information Administration (EIA) is scheduled for release later on Thursday, delayed by one day due to the Memorial Day holiday earlier in the week.
