Global energy markets are in a tailspin as global oil prices jumped more than 5% on Wednesday.
Oil prices jumped following a dramatic escalation in the Persian Gulf, where the United States and Iran traded heavy military strikes, effectively shattering a fragile interim ceasefire.
Also, U.S President Donald Trump has declared that the ceasefire agreement with Iran is “officially over”.
The latest conflict has reignited severe anxiety over Middle East crude supply disruptions.
Oil futures rapidly erased recent losses to hit a two-week high. The sharp trajectory began on Tuesday and accelerated rapidly during Wednesday’s trading session.
Brent Crude: The international benchmark soared 5.3%, climbing to $78.09 a barrel.
West Texas Intermediate (WTI): The U.S. standard advanced 5.4%, trading at $74.23 a barrel.
Before the flare-up, energy markets had largely stabilized, with traders heavily shorting oil on expectations that a steady recovery in shipping and a wave of pent-up Middle Eastern crude would flood the market.
This latest geopolitical shock forced short-sellers to rush and cover their positions, further compounding the price spike.
The price rally was triggered by direct military action between Washington and Tehran.
According to U.S. Central Command, the U.S. military launched a series of “powerful” strikes on Iranian military targets.
The action was ordered in retaliation for suspected Iranian drone and missile attacks on three commercial shipping vessels transiting the vital Strait of Hormuz and the coast of Oman.
Among the targeted commercial vessels was a massive Qatari liquefied natural gas (LNG) tanker, the Al Rekayyat, which suffered an engine room fire following a drone strike. A Saudi-flagged crude supertanker was also reported damaged.
In response to the U.S. bombardment, Iran’s Revolutionary Guards retaliated by striking dozens of U.S. military facilities located in Bahrain and Kuwait.
Following the exchange, Washington officially revoked a temporary sanctions waiver that had previously authorized the sale of Iranian crude, dealing a massive blow to the shaky framework peace agreement negotiated earlier.
Trump confirmed this while speaking to the press at the Nato summit in Ankara.
Trump said: “It’s a very interesting question. To me, I think it’s over.
“I don’t want to deal with them anymore, they’re scum. You know what scum is? They’re scum. They’re sick people. They’re led by sick people. And they’re vicious, violent people.
“And if they had a nuclear weapon, they’d use it. As far as I’m concerned it’s over.
“I’ll speak to our negotiators, they want to negotiate, they’re good people. Steve Witkoff, Jared Kushner, but they have to come back to me. As far as I’m concerned, it’s just a waste of time dealing with them. They’re liars.
“We make a deal. If I make a deal with him [pointing at Nato Secretary-General Mark Rutte], we have a deal. He goes out, he talks. We [US and Iran] make a deal, everyone’s agreed, no nuclear weapon.
“We make a deal. They [Iran] go outside, talk to the press, they say ‘we never even talked about it’. There’s something wrong with them. They’re cuckoo. As far as I’m concerned, it’s over.”
