- The United States revokes the waiver of Iranian oil sanctions, fueling the rally in crude oil.
- Trump warns of tougher measures if Iran attacks Strait of Hormuz.
- Asian stocks rise despite renewed fears of conflict between Iran and the United States.
Oil prices extended their rise on Thursday as Donald Trump said the US ceasefire with Iran was over and ordered new attacks on the country following attacks on ships in the Strait of Hormuz.
Both major contracts soared about 8%, with Brent surpassing $80 a barrel for the first time in two weeks, stoking fresh fears of rising inflation and a hit to the economy.
U.S. West Texas Intermediate Crude futures were trading at $74.52 a barrel. Washington also revoked a temporary sanctions waiver for Iranian oil.
However, stock markets mostly rose and technology companies saw a touch of bargain buying, with Seoul and Tokyo enjoying healthy gains in early trading.
Oil soared on Wednesday as the US president, responding to tit-for-tat attacks already occurring in the region, said the fragile truce between the enemies was over.
Trump on Wednesday ordered new attacks and warned of “much worse” if Tehran continues attacking ships in the strait, through which a fifth of the world’s oil usually 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 hoped the latest military flare-up would end quickly and left the door open for more talks.
He also stated that Tehran had “called a while ago” and that the Iranians wanted to “make a deal,” but did not provide further details about the call, including who was on the line.
He then cast doubt on the value of any deal, calling the Iranians “a little crazy.”
“Trump’s comments set sparks flying – the comments underlined fears that we could see further escalation and a return to pre-MOU conditions,” said Neil Wilson of 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, since A) Trump often makes threats and B) both sides need to return to some kind of confusing pre-war ‘normality.’
“But it clearly appears that the risk of a complete breakdown in negotiations has increased and markets are reflecting this new dynamic.”
Stock markets are largely up, but sentiment remains subdued as the latest spike in geopolitical tensions comes after a long period of selling in the technology sector fueled by concerns about stretched valuations and when AI investments will see returns.
Seoul, the poster child for Asia’s AI-led tech boom this year, added almost 2% but remains susceptible to another pullback, having already plunged more than 20% from its record high hit on June 19.
