Oil jumps on renewed hostilities in Strait of Hormuz

• Brent and WTI up 2.6%
• ‘Powerful’ US strikes on Iran
• IRGC targets 85 military sites

Oil prices jumped and Asian stocks slipped on Wednesday after renewed US-Iran hostilities in the Strait of Hormuz cast doubt on a fragile agreement between Washington and Tehran.

Brent crude contracts rose 2.6 percent to $76.09 per barrel, while West Texas Intermediate contracts gained 2.6 percent to $72.28.

Asian markets opened lower, while US stocks fell on Tuesday with a fresh sell-off of artificial intelligence-linked shares and higher oil prices, after reports of new skirmishes in the Gulf.

The Nasdaq fell more than 1 percent, the S&P 500 slid almost 0.5 percent, and the Dow Jones Industrial Average dropped nearly 0.3 percent.

US forces carried out “a series of powerful strikes” against Iran after Iran struck three commercial vessels in Hormuz, US Central Command wrote in a social media post on Tuesday night.

It called Iran’s actions “unwarranted, dangerous, and a clear violation of the ceasefire.”

A Qatari tanker carrying liquefied natural gas and a Saudi-flagged supertanker laden with crude oil were among the vessels hit off the coast of Oman on Tuesday.

Iran’s Revolutionary Guards said on Wednesday it had targeted 85 US military sites in Bahrain and Kuwait “in response to a US ceasefire violation”, Reuters reported.

The US Treasury Department separately revoked a sanctions waiver issued under a three-week-old interim peace deal allowing Iran to export crude for at least two months while Washington and Tehran continued talks toward a permanent agreement.

Rachel Ziemba, a macrostrategy advisor in New York, called the move “definitely an escalation,” telling AGBI it reinforces many buyers’ “cautious” approach to Iranian crude, given the risk of sanctions snapback.

“Overall, it’s definitely a sign the memorandum of understanding is on the rocks,” she said.

Further reading:

• Iran’s vessel attacks push Hormuz traffic north
• Oman and Iran advance rival plans for Hormuz shipping
• Qatar is an economic loser regardless of the peace talks

The oil sanctions exemption was more symbolic than practical, since all other US financial restrictions against Iran remained in place, Ziemba added on LinkedIn on Tuesday.

“There’s little evidence that buyers other than China were buying Iranian fuel trade or that Iran was able to do much with dollars earned, at least not legally,” she wrote. “This dynamic undermined the benefits to Iran from the MoU.”

The US-Iran MoU was signed last month, with the two nations agreeing on a roadmap to reach a final deal within 60 days.

GCC stock markets closed in positive territory on Tuesday, with the Saudi benchmark up 0.4 percent.

Regional markets have yet to open for trading today.