(RTTNews) – Reversing yesterday’s plunge, crude oil prices surged on Wednesday amid concerns about the gulf conflict intensifying further after the U.S. and Iran recommenced attacks. The Strait of Hormuz continues to remain closed, keeping supply disruption concerns alive.
WTI Crude Oil for July month delivery was last seen trading up by $2.26 (or 2.56%) at $90.46 per barrel.
The Middle East crisis re-escalated following new attacks between the U.S. and Iran since late yesterday.
Yesterday, Trump reassured that a strong and powerful deal with Iran to end the mutual conflict (which began on February 28) could be signed in a matter of two to three days and confirmed that the Strait of Hormuz will reopen soon following that.
Market participants cheered the announcement and the increasing prospects of restoration of normalcy in oil and energy trade across the Strait of Hormuz, which has remained shut for nearly three-and-a-half months, impacted oil prices on the downside.
Hours after talking about the peace deal, Trump stated that Iranian forces had downed a U.S. Apache Helicopter patrolling across the Strait of Hormuz and vowed that the U.S. must and will respond strongly.
Today through Truth Social, Trump condemned Iran for delaying the negotiations unnecessarily and warned that it will pay the price for slowing the talks.
Trump maintained his earlier stance that Iran does not have the big army, navy, or air force it once had and stated that the big bully of the Middle East is dead.
In response, Iran’s Foreign Minister Abbas Araghchi warned that Iran would not leave any attack unanswered and threatened U.S. forces to leave the region if they wish to stay safe.
Following orders from Trump, U.S. forces launched targeted attacks in Iran. U.S. Central Command called these strikes a proportional response to Iranian downing of U.S. helicopter.
In retaliation, Iran struck U.S. bases in Bahrain, Jordan, and Kuwait.
Economists are concerned that a broader escalation could hold the Strait of Hormuz closed for a much longer period of time.
Traders predict that the trajectory of oil prices would depend on the developments over the coming hours.
If the ceasefire breaks and the conflict escalates into a large-scale war it would push oil prices still higher.
Meanwhile in the U.S., the Labor Department’s data revealed that in the month of May, the annual inflation rose by 4.20% from the previous year, largely due to the jump in energy prices to around 3.90% during the month and up 23.50% from a year ago.
On the inventory front, data from the American Petroleum Institute revealed that crude oil inventories fell by 9,100,000 for the week ending June 5, far above forecasts of a 3,400,000-barrel draw, after declining by 6,700,000 barrels in the previous week.
According to the U.S. Energy Information Administration, for the week ending June 5, crude oil inventories in the U.S. decreased by 7,230,000 barrels.
For the same period, gasoline inventories increased by 186,000 barrels, distillate inventories decreased by 200,000 barrels, and heating oil inventories decreased by 246,000 barrels.
The U.S. dollar index was last seen trading at 99.90 down by 0.11 points (or 0.11%) today.
Experts are of the view that rather than going for a broader military campaign, the U.S. has given a calibrated response to Iran to deter them from resorting to any future military offensive while keeping the doors for negotiations still open.
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