Oil prices surged Wednesday, with both Brent and WTI posting gains of nearly 5%, after renewed tensions between the United States and Iran raised fears that hostilities could once again disrupt energy shipments through the Strait of Hormuz.
Brent crude settled at $78.02 per barrel, up $3.86 (5.2%), while West Texas Intermediate (WTI) closed at $73.52 per barrel, up $3.08 (4.4%). Both benchmarks reached their highest settlement levels since late June before retreating from session highs as concerns over an immediate escalation eased.
Market sentiment shifted sharply after renewed military threats increased uncertainty surrounding the temporary ceasefire between Washington and Tehran. While officials later indicated that a broader conflict was not imminent, the heightened rhetoric reinforced concerns that shipping through the Strait of Hormuz could remain constrained, keeping a geopolitical risk premium in crude prices.
The market also received support from tightening refined product supplies. Diesel prices climbed sharply following new export restrictions from Russia and continued disruptions to refinery operations, while U.S. government data showed a sizable decline in distillate fuel inventories despite an unexpected increase in domestic crude oil stockpiles.
With approximately one-fifth of global oil trade dependent on the Strait of Hormuz, traders continue to closely monitor developments in the Middle East, as any disruption to shipping or energy infrastructure could quickly tighten global supply and increase price volatility.