Oil prices jump after Trump threatens to hit Iran 'very hard'

NEW YORK: Oil prices rose nearly $3 a barrel on Wednesday after President Donald Trump said the U.S. is going to attack Iran “very hard” ‌if no peace deal is finalized and as market data showed a larger-than-expected drawdown in U.S. crude inventories.

Brent crude futures were up $2.63, or 2.8%, at $94.06 a barrel at 1:07 p.m. EDT (1707 GMT), while U.S. West Texas Intermediate (WTI) crude rose $2.93, or 3.3%, to $91.12 a barrel, after earlier touching a session high of $91.47.

Trump reiterated that Iran would be attacked on Wednesday. He made ​the remark after scolding Tehran in a Truth Social post for allegedly prolonging negotiations following tit-for-tat strikes overnight.

“Oil prices have shifted from anxiety to apathy ​and back again amid renewed skirmishes between the U.S. and Iran,” said Phil Flynn, senior analyst at the Price ⁠Futures Group.

Trump also announced on Wednesday that the U.S. has been taking “millions of barrels” of oil out of Iran, without sharing any other details ​about these operations.

Separately, the U.S. Department of Treasury issued a fresh round of Iran-related sanctions that targeted six individuals and four entities, including some tied to ​China, according to a notice posted on its website on Wednesday.

FOCUS BACK ON WAR RISKS

The U.S. military struck Iranian targets after Trump vowed on Tuesday to respond to the downing of a U.S. Apache attack helicopter.

The U.S. military also carried out a “precision” strike on a vessel in the Gulf of Oman that failed to follow its instructions and was carrying oil from ​Iran, it said, while India said three of its seafarers were missing after the attack.

“While diplomatic efforts remain ongoing, the latest military exchanges have ​reintroduced a geopolitical risk premium into oil markets,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

In what could further complicate talks, the U.N. nuclear watchdog’s 35-nation Board of Governors ‌passed a ⁠U.S.-backed resolution on Wednesday telling Iran to declare its remaining enriched uranium stocks and let inspectors verify them.

Global crude oil stock draws are underpinning prices, but lower Chinese crude oil imports are helping to keep a ceiling, PVM analyst Tamas Varga said.

The limited flow of shipping through the Strait of Hormuz could also be capping prices, Varga said, as some ships transit the strategic waterway, but traffic remains significantly below pre-war levels.

Iran has continued to block most shipping through the Strait, ​which normally carries a fifth of ​the world’s crude oil and liquefied ⁠natural gas, while Washington has imposed its own blockade of Iranian ports.

U.S. Energy Secretary Chris Wright, however, said on Tuesday that ship traffic in the Gulf and oil exports through the strait are rising even as Washington and Tehran struggle ​to reach a deal to end a war now in its fourth month. Soaring energy prices caused U.S. consumer inflation to ​increase at the ⁠fastest pace in three years in May. Traders are now betting that the Federal Reserve will raise interest rates in December.

Weekly data from the U.S. Energy Information Administration showed that U.S. crude stocks fell sharply last week as refiners continued to boost activity to fill supply gaps caused by the Iran war.

Crude inventories fell by ⁠7.2 million ​barrels in the week ended June 5, the agency said, compared with analysts’ expectations in a ​Reuters poll for a draw of 4 million barrels.
The data also showed that inventories in the U.S. Strategic Petroleum Reserve are now at their lowest levels since August 2023.