Oil prices climbed sharply on Wednesday after U.S. President Donald Trump said he considered the interim peace framework between Washington and Tehran to be finished, raising fresh concerns over stability in the Middle East and global crude supplies.
By 08:46 GMT, Brent crude, the international benchmark, had advanced 5.5% to $78.24 a barrel, while U.S. West Texas Intermediate crude gained 2.9% to $72.49 a barrel.
Renewed Conflict Fuels Supply Concerns
Speaking during the NATO summit in Turkey, Trump questioned Tehran’s commitment to the agreement and suggested the ceasefire arrangement had effectively collapsed.
“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 on Wednesday, Iranian military officials said they had launched attacks against U.S. military facilities in Kuwait and Bahrain in response to recent American strikes inside Iran and Washington’s decision to revoke a sanctions waiver covering Iranian oil exports.
Iran’s Islamic Revolutionary Guard Corps said it had targeted 85 U.S. military sites and destroyed an American MQ-9 drone. Previously, the Pentagon said U.S. operations were launched in response to Iranian attacks on commercial shipping in the Strait of Hormuz, adding that more than 80 targets inside Iran and over 60 IRGC vessels had been struck.
The United States also ended a key exemption that had allowed Iran to continue exporting oil internationally, a move that could tighten global crude supplies in the weeks ahead.
Although Tehran has denied responsibility for Tuesday’s attacks on commercial vessels near Oman, the latest military exchanges have cast fresh doubt over negotiations aimed at securing a lasting peace agreement.
Hormuz Risks Return to the Forefront
Oil prices had fallen back to pre-conflict levels in June after the United States and Iran reached a framework agreement that helped restore shipping through the Strait of Hormuz, a route handling around one-fifth of global oil and LNG trade.
The latest escalation has renewed fears that the agreement could unravel completely, leaving future negotiations increasingly uncertain.
“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.
OPEC Output and U.S. Inventories Also in Focus
The renewed geopolitical risk has largely overshadowed expectations of increased supply after OPEC and its allies agreed over the weekend to raise production.
Investors are also awaiting official U.S. inventory data later on Wednesday after recent supply disruptions linked to the Iran conflict.
According to the American Petroleum Institute, U.S. crude inventories declined by 399,000 barrels last week, a smaller draw than analysts had expected.