Oil up 4% after Iran’s retaliation to US strike

Oil prices surged nearly 4 percent on Thursday morning after the US struck an Iranian military site late Wednesday and Iran retaliated with strikes on an American airbase the following morning, despite a fragile ceasefire in place since April.

Brent crude futures were up 3.72 percent, to $97.80 a barrel at 03:44 GMT, while US West Texas Intermediate futures rose 3.73 percent to $91.99.

The benchmarks fell more than 5 percent in the previous session to their lowest level in a month amid speculation of a US-Iran peace deal and the reopening of the Strait of Hormuz.

The US military launched new strikes in Iran targeting a military site that they believed posed a threat to US forces and commercial maritime traffic in the Strait of Hormuz.

Iran’s Tasnim news agency confirmed the Islamic Revolutionary Guard Corps targeted an American airbase following early morning US strikes on a location near Bandar Abbas airport.

No details were provided on the location of the airbase, but the state-run Kuwait News Agency (Kuna) reported that Kuwaiti air defences had repelled drone and missile attacks in the early morning.

Meanwhile, the American Petroleum Institute said US crude oil stockpiles declined by 2.8 million barrels last week, marking the sixth straight weekly fall.

Official inventory data from the US Energy Information Administration will be released on Thursday.

Further reading:

• Murkiness of the Hormuz timetable threatens an oil price spiral
• Water is the new oil for the GCC
• Gulf oil spill ‘would rival Exxon Valdez disaster’