Global oil prices surged in early Thursday trading after fresh U.S. military strikes on Iranian targets reignited fears of a wider Middle East escalation, reversing recent optimism around peace negotiations between Washington and Tehran.
The rally follows a volatile week in which crude benchmarks had fallen more than seven per cent on expectations that diplomatic talks could lead to eased tensions and smoother oil flows through the Strait of Hormuz.
As at the time of writing 03:27 am (AT), Brent crude stood at $97.90 per barrel, recording a 3.83 per cent gain, while WTI crude traded at $92.22 per barrel, up 3.99 per cent.
The market’s direction changed after reports emerged that U.S. forces launched new strikes on military assets in southern Iran and intercepted four Iranian attack drones. U.S. Central Command officials described the operation as defensive, saying the targeted facility was preparing to deploy another drone.
The latest military exchange has clouded hopes of a near-term diplomatic breakthrough. President Donald Trump further unsettled markets after signalling he was in no hurry to conclude an agreement, insisting Washington would only proceed if the terms strongly favoured U.S. interests.
Earlier optimism had been fuelled by reports suggesting a ceasefire extension and possible discussions around sanctions relief and frozen Iranian assets. However, tougher rhetoric from Washington and internal resistance inside Iran are now complicating that outlook.
Reports indicate powerful factions within Tehran are pushing back against compromise, insisting Iran maintain full control over the Strait of Hormuz and reject concessions linked to uranium enrichment.
Oil prices also found support from tightening U.S. supply data. The American Petroleum Institute reported a 2.8-million-barrel decline in U.S. crude inventories last week, marking the sixth consecutive weekly drawdown and reinforcing concerns about tightening physical markets.
For global energy markets, the message is becoming clearer: until a durable agreement is secured and stability returns to the Strait of Hormuz, oil prices will continue to react sharply to every strike, diplomatic statement and supply signal emerging from the region.