Oil prices rose sharply on Wednesday as renewed fighting between the United States and Iran heightened fears over global energy supplies and the future of shipping through the Strait of Hormuz.
Crude prices jumped more than two per cent, bringing their increase for the week to around 10 per cent after the United States carried out fresh attacks on an Iranian island in the Strait of Hormuz. Iran responded with missile and drone attacks targeting US interests in several countries across the Middle East.
The escalation has raised concerns about a prolonged disruption to the Strait of Hormuz, a vital global shipping route through which roughly one-fifth of the world's oil and gas supplies pass.
Brent crude rose 1.9 per cent to about $96.45 a barrel, while West Texas Intermediate increased 1.5 per cent to $91.60 a barrel.
The renewed conflict also weighed on global financial markets. Asian stocks declined, with technology companies among the biggest losers as investors became increasingly concerned about higher borrowing costs and persistent inflation.
Markets in Tokyo, Hong Kong, Shanghai, Singapore, Sydney, Taipei and Manila all recorded declines following losses on Wall Street.
Investors are now closely watching upcoming US employment and inflation data, which could influence the Federal Reserve's decision on interest rates. Traders are reportedly pricing in a 70 per cent probability of another rate increase.
Iran Retaliates Against US
Iran launched attacks against US interests across the Middle East on Wednesday after Washington carried out fresh strikes against Iranian targets.
Iranian state media reported that ballistic missiles were fired at two US bases in Jordan. Jordan's military said it intercepted 10 missiles launched from Iran, while three others landed in remote areas.
Missile and drone attacks were also reported in Kuwait, while air raid alerts were heard in Bahrain.
Iran's Revolutionary Guards also claimed to have attacked US bases in Iraq's Kurdistan region with missiles and drones. Iranian officials said the attacks caused damage to military facilities and equipment.
The latest escalation follows several weeks of relative calm and stalled diplomatic efforts to end the conflict.
US President Donald Trump warned Iran that further retaliation would trigger even stronger American attacks.
Trump described the latest US military action as "large and powerful" strikes, saying they were carried out in response to Iran's alleged attempts to place sea mines in the Strait of Hormuz and attacks against US military forces.
Iranian officials, however, vowed to continue responding to American military operations.
Strait of Hormuz Remains Key Concern
The Strait of Hormuz has remained at the centre of the conflict because of its importance to global energy markets.
Iran has kept the waterway effectively closed, while the United States continues its counter-blockade of Iranian ports. The disruption has raised fears that oil and gas prices could remain elevated for an extended period.
Two crude oil tankers were reportedly hit by unknown projectiles, according to a Greek maritime risk management firm. No casualties or environmental damage were reported.
The continuing tensions have increased fears of higher inflation worldwide, potentially forcing central banks to maintain or raise interest rates despite concerns about economic growth.
The conflict began in late February with US and Israeli attacks on Iran, which killed Iran's Supreme Leader, Ayatollah Ali Khamenei.
A fragile ceasefire reached later collapsed following attacks on commercial shipping in the Strait of Hormuz.
Iranian President Masoud Pezeshkian has said Tehran remains open to diplomacy but warned that renewed US pressure and threats could undermine efforts to reach a new agreement.
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