Oil prices jumped more than 6% on Wednesday, reaching their highest level in two weeks after U.S. President Donald Trump said the memorandum of understanding aimed at ending the conflict with Iran was “over.”
The comment renewed concerns that tensions in the Middle East could disrupt oil supplies and tanker movement through the Strait of Hormuz.
Brent and WTI Hit Two-Week Highs
By 0948 GMT, Brent crude futures had risen $4.57, or 6.16%, to $78.73 a barrel.
U.S. West Texas Intermediate crude climbed $4.23, or 6.01%, to $74.67 a barrel.
Both benchmarks reached their highest levels since June 22.
Prices Had Already Risen Tuesday
Oil prices had already gained about 3% on Tuesday.
That increase came after the United States revoked the general licence that had allowed the sale of Iranian crude.
The move added pressure to oil markets even before Trump’s latest comments raised fresh concerns.
Trump Says Iran Agreement Is Finished
Trump said Wednesday that the memorandum of understanding signed with Iran to end the conflict was no longer in effect.
He also said he did not want to engage with Tehran.
The agreement, brokered by Pakistan last month, was intended to create a 60-day window for negotiations.
However, it came under pressure after the United States launched new strikes on Iran.
Strait of Hormuz Risks Return
Saxo Bank analyst Ole Hansen said the market is once again having to price in the risk of renewed attacks on shipping or a deeper breakdown in U.S.-Iran relations.
He said such developments could slow efforts to normalize flows through the Strait of Hormuz.
The strait is one of the world’s most important energy routes and carried about one-fifth of global energy supply before the war began in late February.
U.S. Strikes Follow Attacks on Commercial Ships
U.S. Central Command said Tuesday that American airstrikes were a response to Iranian attacks on three commercial vessels moving through the Strait of Hormuz.
Iran’s Revolutionary Guards later said they targeted U.S. military sites in Bahrain and Kuwait early Wednesday.
The exchange has intensified fears about the safety of oil and gas tankers in the region.
Tankers Turn Back Amid Safety Concerns
Ship-tracking data showed that at least four oil and gas tankers turned back after attempting to pass through the Strait of Hormuz.
The reversal came as renewed attacks on vessels increased worries about maritime security.
Hansen said the deeper supply challenge has not gone away, but the latest escalation has interrupted the market’s recent attempts to stabilize.
Supply Concerns Resurface
Sauk Kavoniv, head of research at MST Marquee, said Trump’s statement that the memorandum of understanding is over raises the possibility that the Strait of Hormuz could again face closure risks.
He said this could happen if a new cycle of escalation begins.
Such concerns have added momentum to oil prices after weeks of relative relief.
Traders Had Bet on Lower Oil Prices
After the U.S. and Iran agreed to a truce last month, oil prices fell back to pre-war levels.
Many traders built large short positions in oil futures, expecting prices to decline further.
However, renewed violence and uncertainty have forced markets to rethink those expectations.
Inventories Used to Cover Supply Shortfalls
Since the conflict began, countries have drawn down oil inventories to help offset supply shortages.
Bjarne Schieldrop, chief commodities analyst at SEB, said oil closer to $80 a barrel better reflects current market fundamentals than a price near $70.
China Eases Fuel Export Restrictions
Meanwhile, China has lifted refined fuel export restrictions for the rest of July.
Trade sources said Wednesday that the country also allowed a private refiner to resume shipments after a four-month pause.
The move suggests the world’s largest refiner is moving back toward normal operations after disruptions linked to the Iran war.
Oil prices surged sharply after Trump said the U.S.-Iran memorandum of understanding was over, raising fears of renewed conflict and possible disruption in the Strait of Hormuz. With U.S. and Iranian strikes escalating, tankers turning back, and markets reassessing supply risks, crude prices have moved closer to levels analysts say better reflect current global energy uncertainty.