Oil prices extended their surge on July 9 as Donald Trump said the U.S. ceasefire with Iran was over and ordered fresh strikes against the country following attacks on ships in the Strait of Hormuz.
Crude soared on July 8 when the U.S. president, in response to tit-for-tat attacks in the region already taking place, said the fragile truce between the foes was over.
Washington also revoked a temporary sanctions waiver for Iranian oil.
Both main contracts soared around 8 percent, with Brent topping $80 a barrel for the first time in two weeks, fanning fresh fears of a spike in inflation and a hit to the economy.
"Trump's remarks set sparks flying, 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 base case as A) Trump is wont to throw around threats and B) both sides need to return to a kind of hazy pre-war 'normality.'
"But it clearly seems the risk of a total breakdown in negotiations has increased and markets are reflecting this fresh dynamic,” he said.
“The oil market has continued to rally as the ceasefire between the U.S. and Iran appears to be on life support,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in a commentary.
The pair said that vessel tracking data showed tanker crossings in the Strait of Hormuz have fallen in recent days. That’s reigniting investor concerns on oil supplies.
