US-Iran Conflict Sparks Fresh Oil Price Surge

Oil prices surged on Wednesday, extending gains from the previous session, as tensions between the US and Iran escalated after a series of airstrikes. Brent crude futures rose by $0.75 or 0.8%, to $95.40 a barrel, while U.S. West Texas Intermediate crude futures climbed by $0.44 or 0.5%, to $90.66.

The latest exchange followed a weekend flare-up in hostilities, the first since July, and came after attacks on two tankers departing the Strait of Hormuz on Monday, causing further disruptions to oil supplies. Iran's Islamic Revolutionary Guard Corps said the US attacks would further restrict traffic through the Strait, a critical waterway that carries about one-fifth of global oil consumption.

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