Oil prices jump over 1% after renewed hostilities between US, Iran

Oil prices were up more than 1 per cent on Friday after renewed fighting broke out between the US and Iran, threatening a shaky ​ceasefire and dashing hopes for progress on reopening the Strait ​of Hormuz, a key oil and gas transit route.

Brent crude futures were up $1.41, or ‌1.41 per cent, at $101.47 a barrel as of 0123 GMT. West Texas Intermediate (WTI) US crude futures rose by $1.12, or 1.18 per cent, to $95.93 a barrel. At the market open prices had risen by more than 3 per cent.

That snapped three days of declines on reports earlier this week the US and Iran were close to agreeing to a deal that would end the fighting and allow the Strait of Hormuz to fully reopen but put off larger issues around Iran's nuclear programme.

 

For the week, both contracts are set to fall about 6 per cent.

Friday's jump in prices followed Iran's accusations the US violated the month-long ceasefire between ‌them, while the US said its attacks were retaliatory strikes following Iranian fire on Thursday on its navy ships transiting through the strait.

Iran's military said the US had targeted an Iranian oil tanker and another ship and civilian areas in the strait and on the mainland.

Despite the renewed combat, US President Donald Trump told reporters later on Thursday the ceasefire was still in effect.

The exchange of fire happened as Washington awaited Iran's response to the ​latest peace proposal, which did not address a number of contentious issues including the US demand to ‌reopen the strait, a conduit for one-fifth of the world's oil and gas supply before the war that has been mostly shut since the conflict, which also included ​strikes by ‌Israel, began on February 28.

"On the supply front, the picture remains tight," IG analyst Tony Sycamore ‌said in a note, while saying a peace deal remains elusive.

Separately, the US Commodity Futures Trading Commission is investigating oil price trades totalling $7 billion ahead of key Iran war-related ‌announcements ​by President Trump, ​Reuters reported on Thursday.

Most of the trades involved short positions, or bets on prices falling, placed on the Intercontinental Exchange (ICE) and Chicago Mercantile Exchange (CME) before Trump's ‌statements to delay attacks ​or announce a ceasefire that led to prices falling.