Oil Prices Soar as US-Iran Tensions Escalate Further

Oil prices surged on Wednesday as the US and Iran exchanged strikes overnight, intensifying concerns over supply disruption in the Middle East. The Brent crude futures rose $0.75 (0.8%) to $95.40 a barrel, while US West Texas Intermediate crude futures climbed $0.44 (0.5%) to $90.66.

The latest exchange of strikes between the two countries followed a weekend flare-up in hostilities and came after attacks on two tankers departing the Strait of Hormuz on Monday. The Islamic Revolutionary Guard Corps said the US attacks would further restrict traffic through the critical waterway, which carried about one-fifth of global oil consumed before the conflict.

ING analysts noted that developments in recent days have brought risks to regional oil supplies back into focus, with rising tensions putting crossings at risk. Priyanka Sachdeva, head of market insights at Phillip Nova, said 'the oil market is no longer pricing just the risk of war; it is increasingly pricing the cost of an unresolved war.'

In the US, crude inventories fell by 2.6 million barrels in the week ended August 28, while distillate stocks declined by 265,000 barrels, according to data from the American Petroleum Institute.