- US lifts Iran oil sanctions, fueling crude rally.
- Trump warns of tougher action if Iran attacks Strait of Hormuz.
- Asian shares rise despite renewed fears of conflict between Iran and the US.
Oil prices extended their gains on Thursday as Donald Trump said the US ceasefire with Iran was over and ordered new strikes against the country following attacks on ships in the Strait of Hormuz.
Both main contracts rose about 8%, with Brent topping $80 a barrel. barrel for the first time in two weeks, prompting fresh fears of a rise in inflation and a hit to the economy.
US West Texas Intermediate crude oil futures traded at $74.52 a barrel. Washington also revoked a temporary exemption from sanctions on Iranian oil.
However, equity markets were mostly higher with tech companies seeing a touch of bargain buying, with Seoul and Tokyo enjoying healthy gains in early trade.
Crude oil soared on Wednesday as the US president – in response to tit-for-tat attacks in the region already taking place – said the fragile truce between the foes was over.
Trump ordered new strikes on Wednesday and warned of “much worse” if Tehran continues to attack ships in the strait, through which a fifth of the world’s oil normally passes.
“This is in retaliation for yesterday’s bombing of ships by Iran,” he said in a post on Truth Social.
However, the US president previously said he expected the latest military flare-up to end quickly and left the door open for more talks.
He also claimed that Tehran had “called a while ago” and that the Iranians wanted “to make a deal so badly”, but gave no further details about the call – including who was on the line.
He then went on to cast doubt on the value of any deal, calling the Iranians “kind of crazy”.
“Trump’s remarks sent sparks into the air – the comments underscored fears that we could see further escalation and a return to pre-MOU conditions,” said Neil Wilson at Saxo Markets, referring to the memorandum of understanding that paved the way for peace talks.
But he added: “For what it’s worth, I don’t think this is the bottom line, as A) Trump is used to throwing around threats and B) both sides need to return to some kind of hazy pre-war ‘normalcy.’
“But it seems clear that the risk of a total breakdown in the talks has increased, and markets are reflecting this fresh dynamic.”
Stocks were broadly higher, but sentiment remains muted as the latest rise in geopolitical tensions comes after a prolonged period of selling in the tech sector driven by concerns over extended valuations and when AI investments will pay off.
Seoul – the poster child of Asia’s AI-led tech boom this year – added nearly 2% but remains susceptible to another pullback, having already pulled more than 20% from its June 19 record high.
