World oil prices soared more than 5% after US President Donald Trump said the ceasefire with Iran was over, following fresh strikes in the Middle East.
International benchmark Brent North Sea crude jumped 5.3% to $78.09 a barrel, while the main US contract, West Texas Intermediate, advanced 5.4% to $74.23 a barrel.
The US has launched extensive strikes on Iran following attacks on ships in the Strait of Hormuz, triggering a wave of reprisals against US bases in the Gulf.
Iran’s parliament speaker Mohammad Baqer Qalibaf accused Washington of major violations of the provisional peace agreement, citing US attacks on Iran, renewed oil sanctions, threats of further strikes, violations of Iranian “adjustments” in the Strait of Hormuz, and continued Israeli attacks against Lebanon.
After the US and Iran signed their truce agreement last month, oil prices tumbled back to pre-war levels and traders amassed large short positions in oil futures, betting that prices would fall further.
Expectations of a wave of pent-up Middle East supply coming onto the market caused the price declines.
Iran did not take responsibility for the vessel attacks, but Qatar blamed Iran for them, including one on a Qatari liquefied natural gas tanker, which reported being struck by a drone that caused a fire in its engine room.
The attacks renewed concerns about tanker traffic through the Strait of Hormuz, which carried cargoes equal to about one-fifth of global energy supply before the war began in late February.
Since the start of the conflict, nations have drawn down their inventories to make up for the supply shortfall.
US crude oil inventories fell again last week, market sources said yesterday, citing data from the American Petroleum Institute. Analysts polled by Reuters had expected crude stockpiles to decline by about 2.4 million barrels in the week ended July 3.