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Oil rose as Iran claimed fresh retaliatory strikes and Israel indicated it is prepared to intensify its role in the war, adding to the risks imperiling energy flows from the region.
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Brent futures traded near US$97 a barrel at the highest since late July, before paring some gains, after jumping more than eight per cent over the previous three sessions. West Texas Intermediate was above US$92.
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Iran’s military said on Thursday it targeted U.S. bases in Kuwait and the UAE with missiles and drones, the state-run Islamic Republic News Agency reported, citing an army statement. Kuwait said it responded to missile and drone threats; the UAE hasn’t announced any incidents.
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Israel indicated that it was prepared to return to the fighting if necessary. Defense Minister Israel Katz said that an Iranian attack on the Jewish state would free Israel from any existing restrictions in a response against the regime in Tehran.
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“We would strike all national, military and civilian infrastructure — including energy infrastructure — and return Iran deep into the Stone Age,” Katz warned.
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Earlier U.S. President Donald Trump, when asked how long a renewed U.S. bombing campaign could continue, said “I don’t think too long,” while adding that “we’re prepared to do another one.” Renewed U.S. strikes followed weeks of relative calm, with Iran hitting back by targeting American bases across the Middle East.
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The conflict’s worsening impact on fuel supplies was underscored by American diesel prices, which surged to the highest since mid-2022. In the U.S., the national average pump price for diesel climbed to US$5.783 a gallon on Wednesday, surpassing the previous wartime peak set in April, according to the American Automobile Association.
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The U.S. military escorted 40 vessels carrying 18 million barrels of oil through the Strait of Hormuz on Tuesday, CNN reported, citing two officials familiar with the matter. Energy Secretary Chris Wright said 17 million barrels of oil exited the waterway on Monday, with overall flows averaging about 8 million barrels a day.
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Still, neither the U.S. nor Iran has shown a willingness to come to the negotiating table since the collapse of an interim peace accord agreed in June. Crude prices have risen about 60 per cent this year, with refined products such as diesel rallying even harder due to the Middle East conflict and the Russia-Ukraine war.
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“It’s the sum of all fears,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management in Copenhagen. “The market is increasingly concerned about military confrontation, in a situation where the Strait of Hormuz remains closed for longer. The war could easily spread like in March to the whole Middle East.”
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Separately, U.S. crude inventories fell by almost 4.5 million barrels last week, the first decline since late July, according to Energy Information Administration figures. Stockpiles at the key storage hub at Cushing, Oklahoma, rose marginally to 22.5 million barrels.
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With assistance from Bingyan Wang and Lars Paulsson
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