Oil rises over 3% as US, Iran resume military attacks
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US forces struck two launchers on Iran’s Larak island in the Hormuz strait on Aug 30.
PHOTO: REUTERS
- Oil prices rose over 3% after US attacked Iran's Larak island and Iran retaliated by striking US bases in Jordan, extending their conflict into its sixth month.
- Efforts to reopen the Strait of Hormuz remain stalled, impacting global oil supply and keeping prices rangebound between US$85-95 per barrel.
- US plans weekly new sanctions on Iran and will use Venezuelan oil to replenish its Strategic Petroleum Reserve, near its lowest in 44 years.
AI generated
SINGAPORE – Oil prices rose more than 3 per cent on Aug 31 after the US attacked an Iranian island in the Strait of Hormuz and drew retaliation from Tehran, as their conflict extended into its sixth month.
Brent crude futures climbed US$2.87, or 3.26 per cent, to US$90.97 a barrel at 11.20am GMT, while US West Texas Intermediate (WTI) crude was up US$2.91, or 3.49 per cent, to US$86.31.
US forces struck two launchers on Iran’s Larak island in the strait on Aug 30, the first known American strikes on the country since late July.
In response, Iran attacked two US airbases in Jordan, Iranian media reported on Aug 31, citing Iran’s Revolutionary Guards.
US President Donald Trump said in a social media post on Aug 30 that Iran’s energy hub of Kharg Island was being “blown to smithereens”, but there was no evidence that the island was under attack.
The social media post, accompanied by an artificial intelligence-generated clip, contained no further details.
Iran denied the attack on the island, adding that oil operations continued.
Efforts to negotiate an end to the conflict remain stalled as mediators seek to reopen the Strait of Hormuz, through which a fifth of global oil supplies passed before the war began at the end of February.
“We see more chances of contained confrontation rather than any sustained escalation in the conflict. What continues to be impacted with every flare-up are the timelines for Hormuz ‘reopening’,” said Suvro Sarkar, head of energy research at DBS.
“We were earlier hoping that we could be back to deal negotiations for US-Iran by the end of Q3, but that is looking more unlikely now. Thus, expect oil prices to remain rangebound in the US$85-95 per barrel range unless more clarity emerges on the situation in the Strait of Hormuz.”
The number of visible commodity vessels that sailed through the strait over the weekend dropped to five a day, shipping data showed on Aug 31, reflecting caution among companies wary of attacks on ships.
The United Kingdom Maritime Trade Operations reported on Aug 30 that a tanker was struck by a projectile while sailing inbound through Hormuz on Aug 29.
US Treasury Secretary Scott Bessent told Reuters on Aug 30 that the US is likely to issue new secondary sanctions weekly on Iran.
Despite the Aug 31 rally, Brent and WTI were still on track to post modest losses for August after falling more than 4 per cent last week, their first weekly declines in three weeks.
Trump also said on Aug 30 that oil secured under a recently struck deal with Venezuela would be used to replenish the US Strategic Petroleum Reserve, which has dropped to near its lowest level in 44 years. REUTERS
