Crude oil prices rose sharply on Wednesday, after President Donald Trump said the United States would hit Iran hard in retaliation for an attempted surprise attack on American forces in the Middle East.
Brent crude futures, the international benchmark, gained 7.9% to close at $90.74 per barrel. WE West Texas Intermediate Futures advanced 6.6% to settle at $84.46 per barrel.
Trump said Fox News that Iran is “going to be beaten” after its Revolutionary Guards launched ballistic missiles at US forces. “We’re going to hit them hard,” the president said.
Iran has targeted a US base in Jordan, according to a report from Axios. US Central Command said the missiles were successfully intercepted.
The attack broke a brief pause in the fighting. Oil futures sold off earlier this week as the conflict appeared on the path to de-escalation.
“We remain extremely skeptical that we are on the verge of a major diplomatic breakthrough that will resolve the nuclear standoff that sparked the war five months ago or allow the normalization of maritime traffic,” Helima Croft, head of commodities strategy at RBC Capital Markets, said in a note to clients Tuesday.
Meanwhile, Iran-allied militias in Iraq launched drones at oil installations in Riyadh and eastern parts of Saudi Arabia, according to the official agency. Saudi Press Agency. US and Saudi military aircraft launched joint strikes against Iraqi militias in retaliation on Tuesday, US Central Command said.
Iran’s Houthi allies in Yemen said Monday they had targeted Saudi pipeline infrastructure which transports oil to the Yanbu export terminal on the Red Sea. Riyadh relies on the pipeline to export its oil, with transport through the Strait of Hormuz disrupted due to Iranian attacks.
Iran and the Houthis are trying to control maritime traffic through Hormuz and the southern Red Sea, the two choke points for oil exports in the Middle East.
The Iranians have repeatedly attacked oil tankers transiting Hormuz this month. The Houthis declared a maritime embargo against Saudi Arabia last week and claimed attacks on two oil tankers in the Red Sea.
“Markets have been jumping on board in hopes of a newfound peace, especially given Iran’s insistence on controlling the strait as part of any potential deal,” Ryan McKay, senior commodities strategist at TD Securities, said in a note published Wednesday.
“We continue to see reduced flows and a global tightening of the energy market that supports further upside in crude oil,” McKay said.
Correction: This story has been updated to correct the delivery month of futures contracts.
