Oil prices surged to $80 per barrel after the United States President, Donald Trump, declared that the interim ceasefire agreement with Iran was officially over.
According to data from oilprice.com, Brent crude rose from $72 to $74 on Tuesday before hitting $80 on Wednesday.
Trump on Wednesday dismissed the recently signed memorandum of understanding with Iran, declaring the MoU a “waste of time” following Iran’s attack on vessels transiting the Strait of Hormuz.
Brent crude for September delivery spiked 7.6 per cent to trade at $80 per barrel, while WTI crude for August delivery jumped to $75.40 per barrel.
Iran attacked three commercial vessels transiting the Strait of Hormuz on Tuesday, prompting retaliatory attacks by the United States.
An LNG tanker was struck on its port side, causing an engine room fire, while a Saudi-flagged supertanker suffered minor damage off the coast of Oman.
In response, the US Central Command conducted massive offensive airstrikes, hitting more than 80 military targets inside Iran.
According to CENTCOM, the operation utilised precision-guided 5,000-pound deep-penetrator munitions against multiple coastal areas, including Qeshm Island and Sirik, as well as the major port city of Bandar Abbas.
The Trump administration also revoked a temporary sanctions waiver that allowed Iran to sell oil and petrochemicals, cutting off a key revenue stream for Tehran.
The Khatam al-Anbiya Central Headquarters in Tehran, on the other hand, announced the formal closure of the Strait of Hormuz, warning all international commercial shipping that any further attempts to transit the waterway would face direct military intervention.
The scale of the assault, much larger than previous reprisal actions, marked the effective collapse of the fragile interim ceasefire signed in June.
It was reported that freight rates for tankers operating in the Gulf have surged as shipowners demand higher risk premiums, while refiners in Asia are scrambling to secure alternative cargoes from West Africa, the United States and Latin America in case the Strait of Hormuz remains closed.
The renewed tension came at a time when Nigerians were awaiting significant reductions in fuel prices following the recent crash in oil prices from a high of $120 to $71 per barrel in recent days.
There are concerns that fuel prices may rise again if the renewed tension in the Middle East is not curtailed, to prevent oil prices from returning to the April level.
