US Strikes on Iran Send Oil Prices Soaring 2% to US$75.91
Global oil prices surged on Wednesday morning following a United States military strike on Iran and the reimposition of trade sanctions targeting the country’s oil exports. The escalation has heightened market concerns over global energy supplies, particularly amid renewed tensions around the Strait of Hormuz.
Based on Refinitiv data at 09:55 Western Indonesia Time, Brent crude was trading at US$75.91 per barrel, a 2.36% increase from the previous close of US$74.16 per barrel. Meanwhile, West Texas Intermediate (WTI) strengthened 2.47% to US$72.18 per barrel, up from Tuesday’s close of US$70.44 per barrel.
The increase extends a recent recovery in oil prices. Brent has now risen approximately 5.5% since Monday’s close, while WTI has gained around 5.3% over the same period.
Reuters reported that market sentiment shifted after Washington struck Iranian air defence facilities, coastal surveillance systems, and anti-ship missile and drone launch sites. Concurrently, the US government revoked waivers that had previously allowed Iran to continue selling oil on the international market.
The situation has revived concerns about potential disruptions to energy distribution in the Middle East, given the Strait of Hormuz’s critical role as a shipping lane for global energy trade.
Despite the heightened tensions, market participants have yet to view the situation as a full-blown panic. Jason Wong, a senior strategist at BNZ in Wellington, noted that the oil market has proven fairly resilient to supply shocks in recent months. However, he cautioned that the buffer is now narrower because global oil inventories are at low levels.
Data released this week also showed that the United States’ Strategic Petroleum Reserve (SPR) has fallen to its lowest point since 1983. This diminishes the country’s ability to cushion volatility should global oil supplies face further disruption.
Beyond the energy market, the rise in oil prices triggered a sell-off in US government bonds as investors began to price in the potential for higher inflationary pressure if energy costs continue to climb. Meanwhile, stock markets moved more cautiously amid the increasing geopolitical uncertainty.