Oil surges above $95 on renewed US-Iran fighting and Hormuz disruption concerns

Oil prices surged above $95 per barrel on Wednesday, driven by fears of increased disruption in the Strait of Hormuz following renewed fighting between the United States and Iran. Brent crude, the benchmark for two-thirds of the world's oil, rose 0.87% to $95.47 a barrel, while West Texas Intermediate, the gauge for US crude, climbed 0.55% to $90.72 a barrel. Both benchmarks had jumped more than $4 on Tuesday, marking their highest gains in over a month.

US President Donald Trump announced on Tuesday that the US had launched "large and powerful" strikes on Iranian targets near the Strait of Hormuz in response to Iran's failed attempt to place sea mines in the waterway and its successful shooting down of eight Iranian missiles at a US military base in Jordan. Trump also warned of a "biggest attack of them all" to follow, which he predicted would significantly weaken the Islamic Republic of Iran.

Iran pledged retaliation against the US strikes, with attacks expected in the south of the country. Kuwait, Jordan, and Bahrain issued alerts and intercepted missiles in the early hours of Wednesday. The heightened tensions in the Middle East sent crude prices soaring, pushing Wall Street lower and driving global bond yields to multi-year, and in some cases, multi-decade, highs, according to Kyle Rodda, a senior financial analyst at Capital.com.

Renewed hostilities in the region led to a drop in the number of crossings through the Strait of Hormuz, a crucial waterway that facilitates about a fifth of global oil exports prior to the war. As of Tuesday, only five vessels crossed the Strait, compared to 23 on the previous Wednesday, 25 on Thursday, and 16 on Friday. Daniel Richards, a senior economist at Emirates NBD, stated that any perceived threat to Gulf shipping lanes would maintain an oil-risk premium.