Global crude oil prices surged by more than eight per cent on Wednesday after United States President Donald Trump declared the ceasefire agreement with Iran effectively over, triggering fresh fears of a wider conflict in the Gulf and renewed concerns over global energy supplies.
Brent crude futures rose as much as 8.05 per cent to $80.05 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 7.5 per cent to trade at $75.72 per barrel, marking their highest levels in more than two weeks.
The market rally followed Trump’s declaration that the Memorandum of Understanding (MoU) brokered to halt hostilities between the United States and Iran had collapsed. The U.S. President also warned that Washington could launch additional military strikes against Iran following renewed attacks on American military installations in the Gulf and suggested that Kharg Island—Iran’s main crude oil export terminal—could become a potential target.
The ceasefire agreement, brokered by Pakistan last month to allow a 60-day window for negotiations, came under renewed strain after the United States carried out fresh airstrikes on Iranian military positions in response to attacks on commercial vessels transiting the Strait of Hormuz.
Iran’s Revolutionary Guards subsequently announced retaliatory strikes against U.S. military facilities in Bahrain and Kuwait, escalating tensions and renewing concerns over the security of the Strait of Hormuz, through which about one-fifth of global oil supplies pass.
Iran exports nearly 90 per cent of its crude oil through Kharg Island, located approximately 26 kilometres off its southern coast. Analysts said any disruption to operations at the island could significantly impact global oil markets.
Ship-tracking data also showed that at least four oil and gas tankers reversed course rather than transit the Strait of Hormuz, reflecting growing concerns among shipping operators over the deteriorating security situation.
Oil prices had fallen back to around $70 per barrel following last month’s ceasefire agreement, prompting traders to build substantial short positions in anticipation of further declines. However, the latest escalation has reversed market sentiment as countries continue drawing down strategic inventories to offset supply disruptions.
