LONDON: Global oil prices climbed more than five percent on Wednesday, reaching their highest levels in two weeks after U.S. President Donald Trump declared that the understanding aimed at ending hostilities with Iran had effectively collapsed. His remarks reignited concerns that escalating tensions in the Middle East could disrupt global energy supplies.
Brent crude futures rose by $3.82, or 5.15%, to $77.98 a barrel by 0832 GMT, while U.S. West Texas Intermediate (WTI) crude gained $3.70, or 5.25%, to trade at $74.14 per barrel. Both benchmark contracts touched their strongest levels since June 23.
Oil prices had already gained nearly three percent on Tuesday after Washington revoked a general licence that had allowed the sale of Iranian crude oil, tightening pressure on Tehran’s energy exports.
Speaking before attending a NATO summit in Ankara, President Trump said the temporary understanding intended to halt the conflict involving the United States, Israel and Iran had come to an end. He also indicated that he had no intention of reopening talks with Tehran, casting fresh uncertainty over diplomatic efforts.
Market analysts said Trump’s remarks have significantly weakened hopes for a negotiated settlement. Bjarne Schieldrop, Chief Commodities Analyst at SEB, said the latest developments have placed the future of the 60-day negotiation process in serious doubt. He added that current market conditions justify oil prices closer to $80 a barrel rather than $70.
The renewed market anxiety comes after the United States announced that it had completed another round of military strikes against Iranian targets. According to U.S. Central Command, the attacks were launched in response to Iranian strikes on three commercial vessels passing through the Strait of Hormuz.
Iran’s Revolutionary Guards later claimed responsibility for attacks on U.S. military facilities in Bahrain and Kuwait early Wednesday, further intensifying regional tensions.
Shipping concerns have also grown after reports that several oil and gas tankers either changed course or avoided the Strait of Hormuz following Iran’s announcement that only routes approved by Tehran would be considered safe. Analysts warn that any disruption in the strategic waterway could have major consequences for global energy markets.
Following last month’s ceasefire agreement between the United States and Iran, oil prices had retreated to pre-conflict levels as traders anticipated increased Middle Eastern oil supplies. Many investors had also built large short positions in oil futures, expecting prices to continue falling.
However, the latest escalation has reversed market sentiment. Although Iran has denied responsibility for attacks on commercial vessels, Qatar accused Tehran of carrying out several incidents, including a drone strike on a Qatari liquefied natural gas tanker that reportedly caused a fire in its engine room.
The Strait of Hormuz remains one of the world’s most critical energy corridors, carrying nearly one-fifth of global oil and gas supplies before the conflict erupted in late February. Since then, many countries have relied on strategic reserves to offset supply disruptions.
Meanwhile, support for oil prices also came from declining U.S. crude inventories. Market sources, citing data from the American Petroleum Institute (API), said U.S. crude stockpiles fell again last week. Reuters analysts had projected a decline of around 2.4 million barrels for the week ending July 3, reinforcing expectations of tightening supplies.
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