Oil rebounds after news of US strikes on Iranian military site

[NEW YORK] Oil prices jumped about 2 per cent in early Thursday (May 28) trading after Reuters reported fresh US strikes overnight on an Iranian military site, escalating tensions even as Washington and Teheran negotiate to end their three-month conflict.

Brent crude futures rose US$1.90, or 2.02 per cent, to US$96.19 a barrel by 8.15 am in Singapore, while the more active August contract gained US$1.64 or 1.78 per cent, to US$93.89. The July contract is set to expire on Friday.

The US West Texas Intermediate futures were up US$1.73, or 1.95 per cent, at US$90.41.

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

The US military launched new strikes in Iran targeting a military site that officials believed posed a threat to US forces and commercial maritime traffic in the strait, a US official told Reuters.

“Oil supply remains constrained, and key sticking points have yet to be resolved,” ANZ commodity strategist Daniel Hynes said in a note.

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Brent crude jumps 4%, as US strikes in Iran set back hopes for Hormuz re-opening

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In the US, 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 US Energy Information Administration are due on Thursday, a day later than usual due to the Memorial Day holiday on Monday. REUTERS