Oil prices rose soared on Wednesday after the US carried out a fourth consecutive night of strikes on Iran and reinstated a blockade on vessels travelling to and from Iranian ports.
Brent crude, the global benchmark, was up 0.3% at $85 a barrel in early trading, while West Texas Intermediate (WTI), the US benchmark, gained 0.5% to trade near $80 a barrel.
The latest gains came after the US military confirmed on Tuesday that it had reimposed a blockade first introduced in mid-April and maintained for two months before being lifted under a temporary agreement with Tehran. The earlier blockade had contributed to a sharp rise in oil prices.
However, President Donald Trump offered some reassurance to energy markets after abandoning plans to impose a 20% charge on all cargo transiting the Strait of Hormuz.
The proposal had drawn strong criticism from shipping industry leaders and analysts, who called it impractical and warned that it would badly affect shipping by significantly increasing costs, as well as only further bolster Iran’s own efforts to charge tolls on the strategic waterway.
Despite renewed fighting, investors appear relatively calm about the latest rise in crude prices, with analysts at Deutsche Bank saying that markets were largely “looking through the latest oil price spike”, noting that Brent remained well below the highs seen earlier this year.
“Brent is well below its peak from earlier in the year, having spent around two months above $100 (a barrel),” the bank said in a note on Wednesday.
Nevertheless, shipping traffic through the Strait of Hormuz remains well below normal levels.
According to maritime intelligence firm Kpler, only 17 commercial vessels transited the waterway on Tuesday, while pre-war traffic saw over 100 commercial ships crossing the strait daily.
