Oil prices jumped sharply on Tuesday after the United States revoked the general license authorizing the sale of Iranian crude oil, and reports emerged of multiple tanker attacks near the Strait of Hormuz — stoking fears of renewed disruption to one of the world’s most critical energy shipping corridors.

Prices Settle Up 3%, Then Extend Gains

Brent crude futures settled 3% higher at $74.16 per barrel, while US West Texas Intermediate crude rose 2.76% to $70.44. After the settlement close, both benchmarks extended their gains further following the official license revocation announcement. Brent climbed an additional $1.87 to $76.03, and WTI jumped $1.76 to $72.20 — pushing both contracts more than 5% above the prior day’s settlement prices as of 3:26 p.m. Eastern time.

Tanker Attacks Reignite Supply Disruption Fears

The price spike followed reports that three tankers had been struck in or near the Strait of Hormuz. A Qatari liquefied natural gas carrier was hit by what Qatar said was an Iranian drone. A Saudi-flagged crude oil supertanker, believed to be the Wedyan, was also damaged off the coast of Oman, though the cause of that attack was not immediately confirmed.

The US warned that Iran’s behavior in the strait was “wholly unacceptable” and would be met with consequences. In a separate development, Ukraine’s military said drones struck eight tankers from Russia’s shadow fleet of aging vessels used to bypass sanctions while delivering fuel to Crimea.

Analysts: Ceasefire Is Fragile, Volatility Here to Stay

Market analysts were divided on the long-term implications of Tuesday’s events. Bob Yawger, director of energy futures at Mizuho, described the situation as “the next level of breakaway” from the memorandum of understanding signed in June between the US and Iran. He said it remained unclear whether Iran’s actions were aimed at asserting control over the strait or were partly a show of strength during the ongoing funeral ceremonies for slain Supreme Leader Ayatollah Ali Khamenei. Despite the escalation, Yawger said he did not expect the license revocation to permanently impair Iran’s oil export capacity or derail broader negotiations. “I don’t think it’s in either side’s interest not to get a deal done,” he said.

Ajay Parmar, director of energy and refining at ICIS, struck a more cautious tone. “This shows just how fragile the ceasefire actually is. Further attacks could sporadically appear in the coming months and this will further add to the volatility,” he said. “Just one disagreeable message from one side could bring anger to the other, and remember if Iran merely threatens to close the Strait of Hormuz again, prices will spike considerably. As such, we firmly believe that volatility really is here to stay.”

UBS analyst Giovanni Staunovo said the oil prices Iran oil license escalation could drag down crude exports from the Middle East more broadly if tensions persist.

Iran Warns Talks at Risk

Iran’s foreign minister responded to Trump’s threat to “finish the job” if no deal is reached by warning that final-status negotiations would not proceed under such conditions. Investors are closely watching whether the diplomatic process can survive the current round of escalation, particularly given the Strait of Hormuz’s role — prior to the war — in carrying one-fifth of the world’s daily oil and liquefied natural gas supply.

Author: Staff Writer | Edited for WTFwire.com | SOURCE: Reuters