US oil prices surged nearly 3% in early Wednesday trade, extending gains from the previous session, after the US military launched a series of strikes against targets in Iran.
The escalation marks a significant deterioration in the security environment, heightening concerns that the fragile truce holding the region together is unraveling.
Brent crude and WTI both moved higher as traders reassessed the risk of supply disruption.
The price jump reflects a rapid repricing of geopolitical risk, undoing the stability that had returned to energy markets following the ceasefire agreement in late June. The Strait of Hormuz, a critical chokepoint for global oil flows, remains under scrutiny as tensions flare.
This development follows a period of stalled diplomatic talks in Doha, where US and Iranian negotiators failed to reach a consensus on Strait issues, leaving a shipping risk premium in place. The previous week saw diplomatic rows over deal wording stall shipping normalization efforts, keeping markets on edge. The new military action suggests that diplomatic channels are currently insufficient to contain the conflict.
Investors are now watching for any immediate impact on shipping routes and potential retaliatory measures.