Oil rises more than $1 as escalation in US-Iran strikes unnerve traders

Highlights
- Iran
closes Strait of Hormuz, threatens to fire on vessels attempting passage
- US
launches additional strikes on Iran, escalating tensions after fragile
ceasefire
- US
crude inventories fall sharply, EIA reports 7.2 million barrel crude draw
Oil prices jumped on Thursday as Tehran declared
the critical energy chokepoint, the Strait of Hormuz, closed after the US
launched additional strikes against Iran and as President Donald Trump vowed
even more attacks if no peace deal is secured.
Brent futures rose $1.48, or 1.59%, to $94.58 a
barrel as of 0243 GMT, while US West Texas Intermediate (WTI) crude climbed
$1.71, or 1.90%, to $91.74. US crude futures gained more than $3 earlier in the
session.
Iran's top joint military command announced the
closure of the Strait of Hormuz on Thursday, including oil tankers and
commercial ships, saying any vessel attempting passage will be shot at.
"It once again suggests a deal is still
some way off and that energy flows from the Persian Gulf will remain heavily
constrained," said ING analysts in a note to clients.
The renewed escalation in fighting prompted oil
prices to rally in early morning trading, they said.
On Wednesday, the US military said on X that
commercial ships continue to transit in and out of the strait.
It also said no US warships have been struck in
the strait, after Iran's state media reported US ships near the waterway were
targeted by missiles and drones.
US forces began launching additional strikes
against multiple targets in Iran at 5:15 pm EDT (21:15 GMT), the latest in an
escalating exchange of attacks that threaten to reignite a full-scale war,
which was paused in early April when the two sides agreed to a fragile
ceasefire.
Trump told Fox News reporter Trey Yingst on
Wednesday evening that the strikes would stop shortly but that he would
"bomb the shit out of them" if Iran's leaders did not sign an
agreement with the US immediately.
Iran's months-long blockade of the strait, which
normally carries a fifth of global oil and gas shipments, has kept oil prices
elevated.
Meanwhile, US crude inventories fell by 7.2
million barrels to 426.5 million barrels in the week ended 5 June, the EIA said
on Wednesday, compared with analysts' expectations in a Reuters poll for a 4
million-barrel draw.
US crude inventories, including those from
strategic reserves, have fallen by 79 million barrels since the Iran war began
on 28 February, as the top global producer moved to plug supply gaps after the
strait was effectively shut.
Underscoring the squeeze, OPEC output in May
slid to its lowest level in over two decades, a Reuters survey showed, as a US
naval blockade curbed Iran's exports and Tehran's effective closure of the
strategic waterway slashed shipments from other Gulf producers.
















