Oil prices surge over 5% as US launches fresh strikes on Iran

Global crude oil prices jumped over 5% after the US launched retaliatory strikes on Iran for attacking commercial vessels. The US has called off the peace deal and revoked sanction waivers, escalating tensions and stoking inflation fears.

Global crude oil prices surged more than 5 per cent on Wednesday after the US launched fresh strikes on Iran in retaliation for Tehran striking commercial vessels in the Strait of Hormuz.

"Strikes are in response to Iranian attacks on three commercial vessels that were transiting the Strait of Hormuz. Iran's demonstrated aggression was unwarranted, dangerous, and a clear violation of the ceasefire," the U.S. Central Command said in a post on X.

Trump Calls Off Peace Deal

Speaking to reporters in Ankara during a press conference at the NATO summit, US President Trump called off the interim peace deal with Iran and said that he doesn't want to deal with the Iranians anymore. The president described the Iranian leadership as 'scum'.

Market Reaction and Economic Fallout

The US West Texas Intermediate was trading at USD 74.5, up 5.8 per cent, while the global benchmark Brent crude was trading at USD 78.35, rising by 5.65 per cent.

Oil prices had weakened to pre-conflict levels as talks between the two sides progressed following the signing of a Memorandum of Understanding (MoU) in June that immediately halted hostilities and opened the Strait of Hormuz for 60 days toll-free.

The US has also revoked the sanction waiver that was granted to Tehran in the wake of the interim peace deal and the conclusion of the first round of talks between the two sides in Switzerland.

The commercial vessel traffic picked up after tensions ebbed and signs of a rapprochement appeared to take effect.

Inflation and Rate Hike Fears

The latest round of strikes between the two sides signals that oil prices could again climb back to levels that threaten inflation.

US gasoline pump prices have stayed high despite the recent fall in global crude oil prices and Trump's warning to oil companies to cut them.

High inflation in the US is a worry for Trump as he prepares for the November midterm elections. The fresh bout of tensions between the US and Iran raises the odds of a rate hike by the US Federal Reserve, even as its newly appointed chairman, Kevin Warsh has prioritised bringing inflation down to its comfort level.

(ANI)

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)