Crude oil traded above $84 per barrel on Thursday, extending gains after a rally of more than 6% in the previous session, supported by escalating tensions between the US and Iran that raised the risk of further disruptions to global energy supplies. President Donald Trump vowed a strong response following an attack on US forces in Jordan. At the same time, both sides struggled to reach a potential agreement, with Tehran insisting on retaining control over the Strait of Hormuz.
The conflict has also widened beyond Hormuz into the Red Sea, where Iran-backed Houthi rebels in Yemen have threatened to blockade Saudi Arabia. That prompted Riyadh to join US forces in striking targets in Iraq linked to Tehran-backed militants. In the US, commercial crude inventories posted their largest drawdown since mid-June, reinforcing signs of a tightening physical oil market. The country’s Strategic Petroleum Reserve also declined for an 18th consecutive week, falling to its lowest level since 1983.