Oil prices gained more than 2% on Wednesday after the US military launched airstrikes against Iran and reimposed crude sales sanctions, raising fears their fragile truce was unravelling and Middle East supplies could be disrupted again.
Brent crude futures gained $1.92, or 2.6%, at $76.08 a barrel at 0400 GMT. US West Texas Intermediate crude climbed $1.82, or 2.6%, to $72.26 a barrel, Reuters reported.
Both benchmarks rose about 3% on Tuesday after the US revoked the general license authorizing the sale of Iranian crude following the Iranian attacks.
"While the revocation doesn't fundamentally change oil market dynamics, it's important from a sentiment perspective. It heightens the risk of a breakdown in the temporary deal between the US and Iran," ING commodity strategists said on Wednesday.
The US airstrikes were in response to Iranian attacks on three commercial vessels that were transiting the Strait of Hormuz, US Central Command said on Tuesday.
"The current conflagration is a reminder to the market of how fragile passage through the Strait still is," said Saul Kavonic, head of research at MST Marquee.
"This presents a contrary indicator to the prevailing sentiment that the market could be flooded into oversupply, which may scare some of the record short positioning to cover," he said, adding that if tensions persist and traffic through the waterway remains below 50% of pre-war levels, the resulting supply constraints could support higher oil prices.
After the US and Iran signed their truce agreement last month, oil prices tumbled back to pre-war levels and traders amassed large short positions in oil futures, or bets that prices would fall further.
Expectations of a wave of pent-up Middle East supply coming onto the market caused the price declines.
The latest attacks renewed concerns about tanker traffic through the Strait of Hormuz, which carried cargoes equal to about one-fifth of global energy supply before the war began in February.
Since the war started, nations have drawn down their inventories to make up for the supply shortfall.
