BY COMFORT OGBONNA
Oil prices climbed sharply on Thursday after Iran’s Revolutionary Guards announced they had targeted a U.S. airbase in retaliation for earlier American strikes near the Iranian port city of Bandar Abbas, reigniting fears of a wider conflict in the Middle East and raising concerns over global energy supplies.
Brent crude futures rose more than 2%, gaining $2.38 to trade at $96.67 a barrel by 0845 GMT. The more actively traded August Brent contract also advanced strongly, rising $2.45 to $94.70 a barrel. Meanwhile, U.S. West Texas Intermediate crude futures gained $2.24, or more than 2.5%, to reach $90.92 a barrel.
The sharp rebound came just a day after oil prices suffered steep losses of more than 5%, falling to their lowest levels in over a month. Markets had previously been encouraged by speculation that Washington and Tehran could be moving closer toward a deal that might bring an end to the ongoing conflict and reopen the Strait of Hormuz, one of the world’s most important energy shipping routes.
However, investor optimism faded rapidly after U.S. President Donald Trump dismissed reports suggesting that negotiations with Iran were close to producing a compromise agreement. Shortly afterward, tensions escalated further when Iran’s Revolutionary Guards announced they had launched attacks on a U.S. military airbase in response to what a Washington official described as American strikes targeting an Iranian drone operation near the Strait of Hormuz.
The renewed hostilities immediately reignited fears of disruptions to global crude supplies, especially as the Strait of Hormuz remains a crucial chokepoint for international oil shipments. Roughly a fifth of the world’s oil consumption passes through the narrow waterway, making any threat to traffic in the region a major concern for energy markets.
Analysts said traders are increasingly struggling to determine whether the latest military exchanges are signs of a worsening conflict or part of a broader strategy to pressure both sides toward negotiations.
PVM Oil Associates analyst John Evans said the recent exchange of attacks appeared to be “part of the negotiating language,” suggesting that markets may continue to swing sharply depending on developments in the conflict and any signs of renewed diplomacy.
He added that as long as investors still believe a diplomatic breakthrough remains possible, oil prices may continue fluctuating within a volatile range. However, he warned that tightening global inventories could eventually push prices significantly higher, especially if disruptions around the Strait of Hormuz intensify.
Concerns over shipping security in the region also deepened after shipping data from LSEG and Kpler showed that two supertankers and one liquefied natural gas tanker recently exited the Strait of Hormuz with their transponders switched off before heading toward India and China. Such actions are often viewed as attempts by vessels to reduce tracking visibility in high-risk zones.
The developments have heightened fears among traders that commercial shipping companies may increasingly avoid the region or face higher insurance and transportation costs, potentially driving energy prices even higher in the coming weeks.
Meanwhile, supply concerns were further supported by signs of tightening crude inventories in the United States. Data released by the American Petroleum Institute showed U.S. crude stockpiles fell by 2.8 million barrels last week, marking the sixth consecutive weekly decline.
The continued drop in inventories suggested strong fuel demand and tighter market conditions, adding additional upward pressure on oil prices already fueled by geopolitical tensions.
Investors are now awaiting official inventory figures from the U.S. Energy Information Administration, which are scheduled for release on Thursday following a delay caused by the Memorial Day holiday earlier in the week.
Market participants are expected to remain highly sensitive to any developments involving the United States and Iran, with traders closely watching military activity, diplomatic signals, and shipping flows through the Strait of Hormuz for clues about the future direction of oil prices.
Analysts warned that continued instability in the region could lead to even greater volatility across global energy markets, especially if disruptions to oil exports or shipping routes become more severe.
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