Iran-US War Shows No Sign of Ending, Oil Prices Rise Again to US$94
Global oil prices strengthened again during Wednesday morning trading. According to Refinitiv data, Brent crude contracts rose by 0.85% to US$96.82 per barrel, while West Texas Intermediate (WTI) gained 0.96% to US$94.66 per barrel.
This increase extends a rally that has been ongoing since the beginning of the week. Brent has now surged nearly 5.8% compared to the end of May, while WTI has strengthened by more than 8.4%. Over the past two weeks, oil prices have exhibited significant volatility. On 22 May, Brent briefly touched US$103.54 per barrel before correcting sharply to the US$92 area at the end of May. However, since the start of June, the price trend has reversed upwards.
The primary driver remains the uncertainty surrounding the Iran-US war, which has entered its fourth month. The market was surprised by rising tensions in the Persian Gulf region after the United States military announced it had successfully thwarted several Iranian missile attacks directed at Bahrain, Kuwait, and other regional targets. Washington also claimed to have shot down Iranian drones targeting civilian ships and US forces in Kuwait, alongside strikes on Qeshm Island near the Strait of Hormuz.
This situation reinforces that the ceasefire announced some time ago is far from stable. Although the United States and Iran previously stated they had reached a preliminary agreement to halt the war, no official signing has occurred. Iranian media reported that communication between Tehran and Washington had ceased for several days recently, though President Donald Trump emphasised that negotiations are still ongoing.
Energy market focus is currently centred on the Strait of Hormuz. This narrow maritime passage connecting the Persian Gulf to the Arabian Sea is a vital artery for global energy. Before the conflict broke out in late February, approximately one-fifth of global oil and LNG trade passed through the area. Ongoing disruptions to shipping traffic ensure that geopolitical risk premiums remain high, even though global physical supplies have not yet faced major disruptions.
Threats to shipping continue to escalate. The Islamic Revolutionary Guard Corps (IRGC) has claimed responsibility for attacking several targets related to US interests in the region. The group has also warned that the security of the Strait of Hormuz will be used as a tool of pressure as long as the conflict remains unresolved. This week, the world’s largest shipping company, MSC, reported that one of its vessels was hit by two projectiles while at the port of Umm Qasr, Iraq.
Simultaneously, discussions regarding Iran’s nuclear programme remain at a deadlock. The US government maintains that sanctions relief will only be granted if Iran ceases its nuclear activities. Conversely, Tehran seeks restored access to oil revenues currently hindered by sanctions, eased crude oil exports, the lifting of port blockades, and continued significant influence over the Strait of Hormuz.
These conditions make it difficult for market participants to predict when the war risk premium will dissipate from oil prices. As long as military tensions appear sporadically and major global energy routes are not fully normalised, the market tends to maintain a buying position. Consequently, even though the war has lasted over three months and is no longer producing the sharp price spikes seen at the start of the conflict, oil prices continue to hover near the US$100 per barrel mark.