Oil Prices Jump 2% Over $96 After Iran Targets US Airbase as Strait of Hormuz War Deepens

Oil prices jumped more than 2% on Thursday after Iran's Revolutionary Guards said they had targeted a U.S. airbase in response to an earlier U.S. attack in the port city of Bandar Abbas.

Brent crude futures was up $2.38, or 2.52%, to $96.67 a barrel at 0845 GMT, while the more active August contract gained $2.45 or 2.66%, to $94.70. The July contract is set to expire on Friday.

U.S. West Texas Intermediate futures were up $2.24, or 2.53%, at $90.92.

Both benchmarks had slipped more than 5% to touch their lowest in a month in the previous session on the possibility of a U.S.-Iran deal to end their war and reopen the Strait of Hormuz.

However, hours after President Donald Trump rejected a report he was close to a compromise deal with Tehran, Iran's Revolutionary Guard said it had targeted a U.S. airbase after the U.S. military carried out what a Washington official said were strikes on an Iranian drone operation near the Strait of Hormuz.

"It appears that the trading of airstrikes are part of the negotiating language," said PVM Oil Association analyst John Evans.

"While any faith remains that a deal will be struck, prices will drift until some such time as the depletion in global oil inventories starts to finally bite and once again reminds us of how over a billion barrels of oil is stuck behind the pinch of Hormuz."

Two supertankers and one liquefied natural gas tanker exited the strait earlier this week with their transponders switched off, and are heading for India and China, shipping data from LSEG and Kpler showed.

In the U.S., crude oil stockpiles fell by 2.8 million barrels last week, the sixth straight week of declines, according to American Petroleum Institute data.

Official inventory data from the U.S. Energy Information Administration are due on Thursday, a day later than usual due to the Memorial Day holiday on Monday.

Also read: FII Exodus: How Tax Chaos & West Asia War Spark Indian Capital Flight