Oil surges after new US strikes on Iran

Oil prices rose on Thursday after the United States launched new strikes against Iran, dimming hopes for ending the war and fully reopening the Strait of Hormuz. By 0054 GMT, Brent crude futures rose 78 cents, or 1 percent, to $78.80 a barrel, while U.S. West Texas Intermediate (WTI) crude futures increased 74 cents, or 1.01 percent, to $74.26 a barrel.

The two benchmarks had risen by more than a dollar in after-hours trading on Wednesday after the U.S. military began launching new strikes on Iran. Prior to that, the two benchmark crudes had settled at their highest levels in over two weeks after U.S. President Donald Trump threatened to bomb Iran on Wednesday evening.

The U.S. military said it carried out new strikes on Iran with the aim of keeping the vital Strait of Hormuz open to shipping, hours after Trump stated that the temporary agreement to end the war had “ended.”

Tony Sycamore, an analyst at IG, said in a note that oil flows through the strait have currently halted over the past few weeks, and shipowners are expected to adopt a more cautious stance.

The United States said its latest round of attacks was a response to the targeting of three tankers transiting the strait on Tuesday. The U.S. strikes hit several cities along Iran’s southern coast and caused power outages in some areas.

Iran said on Wednesday that it had attacked U.S. military sites in Bahrain and Kuwait in retaliation for earlier U.S. strikes that targeted infrastructure.

Insurance sector sources said on Wednesday that war-risk insurers had advised shipping companies to suspend voyages through the Strait of Hormuz, while others were reviewing insurance policy terms following the renewed Iranian attacks on vessels.