Crude prices rose sharply on Wednesday after President Donald Trump said the U.S. will hit Iran hard in retaliation for an attempted surprise attack on American forces in the Middle East. Brent reached $89.52 a barrel and West Texas Intermediate $84.26, undoing a sell-off that came as the conflict looked to be de-escalating.
Brent crude futures, the international benchmark, gained about 6.5% to $89.52 a barrel on Wednesday. U.S. West Texas Intermediate futures advanced about 6.3% to $84.26 over the same stretch.
Prices had moved the other way days earlier. Oil futures sold off earlier this week as the conflict seemed to be on a path toward de-escalation. Iran's attempted attack then shattered that brief pause in fighting.
Trump answers an intercepted missile strike
Trump told Fox News that the U.S. would strike Iran after the Islamic Revolutionary Guard Corps launched ballistic missiles at U.S. forces, and according to CNBC the president said: "We'll be hitting them hard".
Iran targeted a U.S. base in Jordan, according to a report from Axios. U.S. Central Command said the missiles were successfully intercepted.
The exchange followed strikes in the other direction. U.S. and Saudi forces hit logistics and weapons sites in eastern Iraq on Tuesday, retaliating against more than 30 drone attacks in the past three days by Iran-aligned attackers, Centcom said.
Hormuz and the Red Sea stay contested
Iran and its Houthi allies in Yemen are trying to control maritime traffic through the Strait of Hormuz and the southern Red Sea, the two crucial chokepoints 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 fired on two tankers in the Red Sea.
RBC stays skeptical of a diplomatic breakthrough
Helima Croft, head of commodity strategy at RBC Capital Markets, told clients in a note on Tuesday that she remains exceedingly skeptical that a major diplomatic breakthrough is at hand — one that would resolve the nuclear standoff that started the war five months ago or enable the normalization of maritime traffic.
Croft continues to maintain that the ongoing threat of missiles, mines, drones and Tehran tolls will keep a significant portion of the shipping market on the sidelines.
Source: CNBC
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