Crude oil prices surged on Wednesday after U.S. President Donald Trump said the interim agreement between the United States and Iran was effectively finished, reigniting concerns over energy supplies from the Middle East.
By 08:46 GMT, Brent crude had climbed 5.5% to $78.24 a barrel, while U.S. West Texas Intermediate (WTI) gained 2.9% to $72.49 a barrel.
Fresh Middle East Tensions Lift Crude
During the NATO summit in Turkey, Trump accused Iran of failing to honour the agreement and suggested diplomatic efforts had reached an end.
“We make a deal, and everyone’s agreed. No nuclear weapons. We make a deal. They go outside, talk to the press, they say we never even talked about it. There’s something wrong with them. They’re cuckoo. As far as I’m concerned, it’s over,” Trump said.
Earlier in the day, Iranian officials said military strikes had been carried out against U.S. facilities in Kuwait and Bahrain in response to recent American operations inside Iran and Washington’s withdrawal of a sanctions waiver covering Iranian oil exports.
Iran’s Islamic Revolutionary Guard Corps claimed it had targeted 85 U.S. military sites and downed an MQ-9 drone. Meanwhile, the Pentagon said American forces had struck more than 80 locations inside Iran and over 60 IRGC vessels after attacks on commercial shipping in the Strait of Hormuz.
Washington also withdrew an important exemption that had allowed Iran to continue selling oil on international markets, increasing expectations of tighter crude supplies.
Strait of Hormuz Back in the Spotlight
Oil markets had stabilised in June after the United States and Iran agreed to a temporary peace framework that helped restore shipping through the Strait of Hormuz, a route responsible for around 20% of global oil and LNG trade.
The latest military escalation has cast doubt over the future of that agreement and raised fresh uncertainty about any long-term diplomatic settlement.
“A return to full-scale U.S.-Iran conflict appears unlikely given growing U.S. political pressure to keep oil prices contained ahead of the November midterm elections. However, there is still no clear path to fully securing the Strait of Hormuz,” OCBC analysts wrote in a note.
Supply Data Remains in Focus
Although geopolitical developments dominated trading, investors also continued to assess the impact of OPEC+’s latest decision to increase production.
Attention is also turning to official U.S. oil inventory figures due later in the day after recent disruptions linked to the conflict.
The American Petroleum Institute reported that U.S. crude inventories declined by 399,000 barrels last week, a smaller draw than expected.
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