3t0l)y38aq21r4{fk2jtex]y_media_dl_1.png ICE, Bloomberg

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(Bloomberg) — Oil jumped as the US and Iran exchanged fresh strikes, with the sides offering conflicting statements on whether the Strait of Hormuz remains open to shipping. 

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Brent rose above $78 a barrel after gaining 5.4% last week, while West Texas Intermediate traded near $74 and European natural gas added as much as 2.7%. Iran said the strait would now be closed “until further notice” — a statement denied by US Central Command, which said that its forces started more attacks to ensure freedom of navigation through the waterway.

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The strikes on Sunday afternoon were the fourth from the US in a week, with Centcom saying they were in response to Iranian attacks on a Cyprus-flagged container ship. CNN reported that the Islamic Revolutionary Guard Corps had fired at commercial ships again, and that US aircraft intercepted an Iranian cruise missile and attack drone.

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The uncertainty is reinserting a war premium into crude prices, which had erased gains after an interim peace deal between the sides offered the prospect of more supply from the Persian Gulf. The flare-up risks derailing efforts to rebuild depleted global oil inventories later this year, the International Energy Agency said on Friday — a reminder of what’s at stake for the global economy if the conflict continues.

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The latest exchange of strikes remains escalatory but “well short of all-out hostilities,” said Saul Kavonic, senior energy analyst at MST Marquee. “We are likely to see oil prices inch higher for as long as the strikes continue and passage through the strait remains more hesitant.”

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There was almost no traffic through the strait — which normally carries about a fifth of global crude and liquefied natural gas supply — on Sunday, with only two oil products tankers seen approaching the chokepoint. Even so, the Joint Maritime Information Center said the southern shipping lane coordinated by Oman remains available.

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The latest escalation has dimmed prospects for diplomacy. Iran’s Parliament Speaker and top negotiator Mohammad Bagher Ghalibaf declared the “era of one-sided deals is OVER,” while Tehran insisted Washington must first honor prior commitments on Hormuz transits and the normalization of its oil exports before talks can resume. US President Donald Trump, meanwhile, declared the ceasefire “OVER” but said the US remained willing to continue negotiations.

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Over the weekend, Iranian media reported explosions were heard east of Bandar Abbas, near the strait. The Islamic Republic launched retaliatory drone and missile assaults on American allies across the Middle East, including Kuwait, Jordan and Qatar. 

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The attack on a Kuwaiti oil drilling facility marks the first direct strike on oil infrastructure in weeks and if the conflict expands to target energy infrastructure more broadly in the region, oil prices could head to $100, Kavonic said. 

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In the past month, Persian Gulf producers including the United Arab Emirates marketed additional crude after the interim agreement eased concerns over exports. The Emiratis, in particular, were among the most successful in getting barrels out using shuttle tankers that sail dark, or with transponders off.

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