Oil extends gains as Iran-U.S. tensions raise concerns over supply

Oil rose Thursday, after fresh strikes on Iran by the U.S. military raised worries about supply disruptions in the Middle East. 

Futures for international benchmark Brent crude for September delivery advanced 1.03% to $78.82 a barrel. U.S. West Texas Intermediate futures for August rose 1.06% to $74.29 per barrel. Prices had risen more than 4% on Wednesday.

The U.S. Central Command said Wednesday that fresh strikes on Iran were launched in response to Tehran’s attacks on commercial shipping in and around the Strait of Hormuz.

U.S. President Donald Trump also signaled earlier in the day that he was no longer interested in negotiating a deal with Iran. Prior to that, he also said that the ceasefire between Iran and the U.S. was “over,” following another wave of attacks in the Middle East.

“The market is again being forced to price the risk that renewed attacks on shipping, or a broader breakdown in US-Iran relations, could slow the normalisation of flows through the Strait of Hormuz,” according to Saxo.

As the Strait of Hormuz is one of the most important energy chokepoints in the world, “even limited disruption can have an outsized impact on prompt pricing, freight costs and market sentiment,” it added.