Oil prices jump 7% after Trump says U.S. will hit Iran hard
Oil rose sharply amid renewed tensions in the Middle East after Iran launched an attack on U.S. forces using ballistic missiles.
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Crude oil prices rose sharply Wednesday, after President Donald Trump said the U.S. will hit Iran hard in retaliation for an attempted surprise attack on American forces in the Middle East.
Brent crude futures, the international benchmark, gained 7.2% to $90.12 a barrel. U.S. West Texas Intermediate futures also advanced 6.6% to $84.46.
Trump told Fox News that Iran "is going to get a beating" after its Revolutionary Guard launched ballistic missiles at U.S. forces. "We'll be hitting them hard," the president said.
Iran targeted a U.S. base in Jordan, according to a report from Axios. U.S. Central Command said the missiles were successfully intercepted.
The attack shattered a brief pause in fighting. Oil futures sold off earlier this week as the conflict seemed to be on a path toward de-escalation.
"We remain exceedingly skeptical that we are on the brink of a major diplomatic breakthrough that will resolve the nuclear standoff that started the war five months ago or enable the normalization of maritime traffic," said Helima Croft, head of commodity strategy at RBC Capital Markets, in a note to clients Tuesday.
Iran-allied militias in Iraq, meanwhile, launched drones at oil facilities in Saudi Arabia's Riyadh and Eastern regions, according to the state-run Saudi Press Agency. U.S. and Saudi warplanes launched joint strikes Tuesday against the Iraqi militias in retaliation, U.S. Central Command said.
Iran's Houthi allies in Yemen said Monday that they targeted Saudi pipeline infrastructure which transports oil to the export terminal Yanbu on the Red Sea. Riyadh is relying on the pipeline to export its oil as shipping through the Strait of Hormuz is disrupted due to Iranian attacks.
Iran and the Houthis are trying to control ship traffic through Hormuz and the southern Red Sea, the two choke points for oil exports in the Middle East.
The Iranians have repeatedly attacked oil tankers transiting Hormuz this month. The Houthis declared a maritime embargo against Saudi Arabia last week and claimed attacks on two tankers in the Red Sea.
"Markets have jumped the gun on hopes of renewed peace, especially considering Iran's insistence on controlling the Strait under any potential deal," said Ryan McKay, senior commodity strategist at TD Securities, in a Wednesday note.
"We continue to see reduced flows and global tightening of the energy market as supportive of further upside in crude oil," McKay said.
Correction: This story was updated to fix delivery month for futures.
