Oil prices moved higher on Thursday as renewed military action between the United States and Iran heightened concerns over global energy supplies. However, gains eased later in the session as traders assessed whether the latest escalation would lead to actual disruptions in crude shipments.
Iran announced the closure of the Strait of Hormuz after the United States carried out additional strikes against Iranian targets and President Donald Trump warned that further attacks would follow unless a peace agreement is 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 the day, both benchmarks had surged by more than $2.
Strait of Hormuz Closure Raises Supply Concerns
Iran’s joint military command said the Strait of Hormuz had been closed to oil tankers and commercial shipping, warning that any vessel attempting to pass through the waterway would be targeted.
“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, adding that the renewed fighting had triggered a sharp rally in oil prices during early trading.
The Strait of Hormuz remains one of the world’s most important energy corridors, making any threat to shipping activity a key concern for oil markets.
Traders Await Evidence of Actual Supply Disruptions
Despite the initial surge in prices, gains moderated as market participants noted that there had been no confirmed interruption to physical oil flows 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.
On Wednesday, the U.S. military stated on X that commercial vessels continued to move through the Strait in both directions. It also denied reports from Iranian state media claiming that U.S. naval vessels operating near the waterway had been targeted by missiles and drones.
Military Tensions Continue to Escalate
According to U.S. officials, additional strikes against multiple Iranian targets began at 5:15 p.m. EDT (2115 GMT) on Wednesday, marking the latest phase in a growing confrontation that threatens to unravel the fragile ceasefire agreed by both sides in early April.
Speaking to Fox News reporter Trey Yingst on Wednesday evening, President Donald Trump said military operations would soon conclude but warned that he would “bomb the shit out of them” if Iranian leaders failed to sign an agreement with Washington immediately.
The latest developments have revived fears that the conflict could expand into a broader regional confrontation with significant implications for global energy markets.
Supply Remains Available Despite Regional Risks
While geopolitical risks have increased, buyers have so far continued to secure crude supplies.
Indian refiners told Reuters on Thursday that they had obtained sufficient crude cargoes to satisfy demand through at least August.
Meanwhile, Abu Dhabi National Oil Co (ADNOC) and several other producers continued exporting crude and offering cargoes to customers across Asia, helping to ease immediate concerns over shortages.
Falling U.S. Inventories Highlight Tight Market Conditions
Data released by the U.S. Energy Information Administration (EIA) on Wednesday showed that crude inventories fell by 7.2 million barrels to 426.5 million barrels in the week ended June 5. Analysts surveyed by Reuters had expected a decline of around 4 million barrels.
Since the Iran conflict began on February 28, total U.S. crude inventories, including strategic reserves, have declined by approximately 79 million barrels as the world’s largest oil producer moved to offset supply shortfalls created by the effective disruption of flows through the Strait of Hormuz.
Further evidence of tightening market conditions came from OPEC production data. A Reuters survey showed that the group’s output in May fell to its lowest level in more than two decades as a U.S. naval blockade restricted Iranian exports and Tehran’s effective closure of the strategic waterway reduced shipments from other Gulf producers.