Oil Prices Surge as US Cancels Iran's Sales License, Launches Strikes

Oil prices rose after the US government’s decision to cancel Iran’s license to sell crude and target it with military strikes, as tensions escalated between Washington and Tehran. The move follows suspected Iranian attacks on ships that use the US Navy’s protected route through the Strait of Hormuz, jeopardizing the interim peace deal signed by Washington and Tehran. The Brent front-month oil futures contract traded 2.89% or $2.14 higher at $75.78 per barrel, while the West Texas Intermediate contract hit $72.20 per barrel, up 5.32% or $3.65. Despite this immediate rise, broader oil prices have returned to pre-war levels due to anticipated supply increases. OPEC+ announced a fifth consecutive output hike of 188,000 barrels per day from August. Further impacting supply, the UAE, having quit OPEC in May, hit a six-year production high. Saudi Arabia also signaled a competitive market by announcing its biggest oil price cuts to Asia in over two decades. The future of oil prices will depend on political developments and production decisions. The energy markets will be closely watched in the coming days.