Global oil prices surged by approximately 2 percent during early Thursday trading as renewed U.S. military action in the Middle East reignited supply fears, stalling optimism over ongoing diplomatic talks between Washington and Tehran.
The market bounceback saw Brent crude futures climb $1.90, or 2.02 percent, to reach $96.19 per barrel. The highly traded August contract posted a $1.64 gain, or 1.78 percent, sitting at $93.89 per barrel ahead of the July contract’s expiration this Friday.
Concurrently, U.S. West Texas Intermediate (WTI) crude futures rallied by $1.73, or 1.95 percent, to settle at $90.41 per barrel.
This sharp reversal comes on the heels of a 5 percent plunge in the previous session, which had dragged both benchmarks to one-month lows amid speculation that a U.S.-Iran peace deal might safely reopen the vital Strait of Hormuz. However, a U.S. official confirmed via Reuters that American forces launched overnight airstrikes against an Iranian military asset deemed a direct threat to commercial shipping and military personnel in the region.
Analysts point out that the underlying fundamentals of the market remain tight despite the geopolitical volatility.
“Oil supply remains constrained, and key sticking points have yet to be resolved,” ANZ commodity strategist Daniel Hynes noted.
Compounding the geopolitical risk, a steady drop in American crude inventories provided additional upward pressure on prices. Industry data from the American Petroleum Institute revealed a 2.8 million-barrel dip in domestic stockpiles last week, marking a continuous six-week draw.
Market participants are now looking to the official weekly inventory report from the U.S. Energy Information Administration, which is set for release later today following a brief delay due to the Memorial Day holiday.