Oil prices traded higher on Thursday as investors reacted to a fresh escalation in military tensions between the United States and Iran, although gains moderated later in the session as markets waited for clearer evidence of disruptions to global crude supplies.
Iran announced that the Strait of Hormuz had been closed after additional U.S. strikes targeted Iranian facilities and President Donald Trump warned that further military action would follow if a peace agreement was not reached.
By 0702 GMT, Brent crude futures were up 8 cents, or 0.09%, at $93.18 per barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 25 cents, or 0.28%, to $90.28 per barrel. Earlier in trading, both contracts had surged by more than $2.
Hormuz Closure Raises Fresh Supply Fears
Iran’s joint military command declared that oil tankers and commercial vessels would no longer be permitted to pass through the Strait of Hormuz, warning that any ship attempting to transit the waterway would come under attack.
“It once again suggests a deal is still some way off and that energy flows from the Persian Gulf will remain heavily constrained,” ING analysts said in a note to clients, highlighting that renewed hostilities had sparked a sharp rally in oil prices during early trading.
As one of the world’s most strategically important shipping routes for crude exports, any threat to traffic through the Strait of Hormuz is closely monitored by energy markets.
Market Remains Focused on Physical Flows
Despite the heightened geopolitical risks, traders have become more cautious as there has been no confirmed interruption to actual oil exports moving through the region.
“However, the rally was not fully sustained as the market has not yet seen an actual disruption in oil shipments through the area,” said Linh Tran, market analyst at XS.com.
The U.S. military stated on Wednesday via X that commercial vessels continued to travel through the Strait of Hormuz without interruption. It also rejected reports from Iranian state media claiming that U.S. naval vessels near the waterway had been targeted by missiles and drones.
Conflict Deepens Following New Military Action
According to U.S. officials, American forces launched additional strikes against multiple Iranian targets beginning at 5:15 p.m. EDT (2115 GMT) on Wednesday, extending a confrontation that threatens to unravel the fragile ceasefire established in early April.
During an interview with Fox News reporter Trey Yingst, President Donald Trump indicated that military operations would soon come to an end but warned that he would “bomb the shit out of them” if Iran’s leadership failed to immediately agree to a deal with Washington.
The latest exchange of attacks has intensified concerns that the conflict could spread further across the region, increasing risks to both energy infrastructure and global commodity markets.
Crude Supplies Continue to Reach Buyers
Although tensions remain elevated, oil buyers have continued to secure supplies and major producers have maintained export activity.
Indian refiners told Reuters on Thursday that they had already secured enough crude cargoes to satisfy demand through at least August.
At the same time, Abu Dhabi National Oil Co (ADNOC) and other producers continued to market and export crude cargoes to customers across Asia, helping to limit concerns about immediate shortages.
Inventory Draw Highlights Tightening Fundamentals
Data released by the U.S. Energy Information Administration (EIA) showed that crude inventories declined by 7.2 million barrels to 426.5 million barrels during the week ended June 5. Analysts surveyed by Reuters had expected a drawdown of around 4 million barrels.
Since the outbreak of the Iran conflict on February 28, total U.S. crude inventories, including strategic petroleum reserves, have fallen by approximately 79 million barrels as the United States sought to compensate for supply disruptions caused by the effective closure of the Strait of Hormuz.
Additional evidence of tightening market conditions emerged from OPEC production figures. A Reuters survey found that output from the producer group fell in May to its lowest level in more than 20 years, as a U.S. naval blockade restricted Iranian exports and Tehran’s effective closure of the critical shipping route reduced exports from other Gulf producers as well.
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