Oil prices climbed sharply on Wednesday after fresh military action by the United States against Iran reignited concerns over supply disruptions, erasing the recent decline that had returned crude prices to pre-conflict levels.
Brent crude, the global benchmark, gained as much as 3 percent, with September futures reaching $76.07 a barrel by 04:00 GMT, their highest level since June 23.
The rally followed US airstrikes on Iran and Washington's decision to revoke a temporary sanctions waiver that had allowed limited Iranian oil sales. The moves came after three commercial vessels were attacked in the Strait of Hormuz.
The United States, Qatar and Saudi Arabia accused Iran of carrying out the attacks.
US Central Command said on X that it had begun “launching a series of powerful strikes against Iran to impose heavy costs for targeting and attacking commercial shipping crewed by innocent civilians in an international waterway”.
Although Tehran has denied direct involvement in the vessel attacks, it has repeatedly warned ships against using routes through the strategic waterway that it has not approved.
Iranian Deputy Foreign Minister Kazem Gharibabadi said Tehran would take “decisive actions to safeguard its national interests and security” following the US decision to cancel the sanctions waiver, calling it a “blatant violation” of the memorandum of understanding (MoU) signed between Washington and Tehran on June 17.
According to Sycamore, the longstanding disagreement between Washington and Tehran over whether the Strait of Hormuz is an international waterway or partly within Iran's territorial waters remains unresolved.
“It remains to be seen whether this morning’s US strikes bring a swift end to the latest escalation or Iran elects to continue flexing its leverage over the Strait with actions that fall short of triggering a broader conflict,” Sycamore said in a note to clients on Wednesday.
“At the very least, it will keep markets on edge and does suggest crude oil prices have based for now.”
The military action followed a separate announcement by the US Treasury Department late Tuesday ending its 60-day waiver on sanctions related to Iranian oil exports.
Last month, the Treasury had permitted Iranian oil sales until August 21 as part of wider negotiations with Tehran. However, under the new directive, all such transactions must cease after 12:01am EDT (04:01 GMT) on July 17, according to a statement posted on the department's website.
The order also cancels authorisation for any new transactions, including oil purchases or cargo loading, after Tuesday.
Saul Kavonic, head of energy research at MST Marquee, said oil prices are likely to remain elevated as security risks continue in the Strait of Hormuz and emergency oil stockpiles begin to diminish.
“Iran fully intends to cement its control over the Strait of Hormuz in the coming weeks, which is unacceptable to the US, many Gulf states and global customers, and could result in passage through the strait remaining below 50 percent of pre-war levels for many months with periodic flare-ups in hostilities,” Kavonic told Al Jazeera.