Brent, WTI rise as U.S. targets Iran

Oil prices surged Wednesday after President Donald Trump threatened to bomb Iran for a second day and reimpose the U.S. naval blockade in retaliation for attacks on tankers transiting the Strait of Hormuz.

West Texas Intermediate futures rose 4.4% to close at $73.52 per barrel. Brent futures, the international benchmark, jumped 5.2% to settle at $78.02.

Speaking at the NATO summit in Turkey, Trump said he considered the ceasefire with Iran over. His comments came after the U.S. bombed the Islamic Republic overnight.

Trump’s threat to bomb and blockade Iran again Wednesday raised fears in the oil market that renewed fighting could disrupt exports through Hormuz just as they had started to recover. But prices eased off the session highs after Trump later said he did not believe Iran and the U.S. would return to full-scale war.

“I don’t think it’s going to start again,” the president said. “I think it’s going to go very quickly. They hit a couple of ships and so we hit them much harder. When they hit, we hit 10 times harder.”

Trump said he expects oil prices to fall as tankers continue to exit Hormuz when asked by CNBC during a press conference in the Turkish capital Ankara.

“They’ll be up a little bit and this will end very quickly,” he said. “We have an oil glut right now because we got all those boats out of the strait and it’s going to drop.”

Meanwhile, Iran warned it would close Hormuz and respond with overwhelming force to fresh attacks, according to state news outlet PressTV.

The U.S. bombed more than 80 targets in Iran overnight including its air defense systems, command and control networks, radar sites, anti-ship missile capabilities and small boats, according to U.S. Central Command.

The Treasury Department on Tuesday cancelled its authorization for Iran to sell oil. The authorization was viewed by critics as a major U.S. concession to Iran in the interim deal.

Iran’s foreign ministry labeled the strikes a “gross violation of the Memorandum of Understanding” Washington and Tehran reached last month to bring the conflict to an end.

The sharp escalation in tensions came after three vessels were attacked in or near Hormuz on Tuesday. The U.S.-led Joint Maritime Information Center increased its threat assessment for ships transiting the waterway to “severe,” warning that further hostile action by Iran was likely.