Global oil prices climbed more than 5% on Wednesday, reaching their highest levels in two weeks after U.S. President Donald Trump declared that the memorandum of understanding aimed at ending the conflict with Iran was “over”, reigniting concerns over potential disruptions to Middle East energy supplies.
Brent crude futures rose $3.82, or 5.15%, to $77.98 a barrel, while U.S. West Texas Intermediate (WTI) crude gained $3.70, or 5.25%, to $74.14 a barrel in early trading. Both benchmark contracts reached their strongest levels since June 23.
The rally followed a sharp rise on Tuesday after the United States revoked the general licence permitting the sale of Iranian crude, adding to market concerns over tighter global oil supplies.
Speaking ahead of a NATO summit in Ankara, President Trump said the interim agreement designed to halt the conflict between the United States, Israel and Iran had collapsed, adding that he no longer wished to engage with Tehran.
Market analysts said the latest developments have significantly increased uncertainty over diplomatic efforts to ease tensions in the region.
Concerns also intensified after the U.S. military said its recent airstrikes were carried out in response to Iranian attacks on commercial vessels transiting the Strait of Hormuz. Iran’s Revolutionary Guards later claimed responsibility for strikes targeting U.S. military sites in Bahrain and Kuwait.
Shipping risks in the Strait of Hormuz, a key route for roughly one-fifth of the world’s oil and gas supplies, have added fresh pressure to global energy markets. Reports that several oil and gas tankers altered their routes or delayed passage through the waterway further heightened fears of supply disruptions.
Oil prices had retreated to pre-conflict levels after the United States and Iran announced a truce last month, with traders expecting additional Middle Eastern supplies to return to the market. However, renewed hostilities have reversed that trend and prompted investors to reassess supply risks.
Supporting the price rally, industry data released by the American Petroleum Institute indicated that U.S. crude oil inventories declined again last week, reinforcing expectations of tighter supply in the world’s largest oil-consuming nation.
