Oil Jumps Over 6% To 2-Week High After Trump Says Deal With Iran ‘Over’

July 8 (Reuters) – Oil prices rose more than 6 percent on Wednesday, reaching a two-week high after U.S. President Donald Trump said the memorandum of understanding to end the conflict with Iran was “done” and renewed concerns of disruptions to Middle East oil supplies.

Brent crude futures LCOc1 rose $4.57, or 6.16%, to $78.73 a barrel at 09:48 GMT, while U.S. West Texas Intermediate crude CLc1 rose $4.23, or 6.01%, to $74.67 a barrel. Indicators are at their highest levels since June 22.

Both rose nearly 3% on Tuesday after the United States revoked a general license allowing the sale of Iranian crude.

Trump said on Wednesday that the memorandum of understanding signed to end the conflict with Iran was “over” and that he did not want to engage with Tehran.

The agreement brokered by Pakistan last month to provide a 60-day window for talks has come under pressure after the US launched a new attack on Iran.

“The market is once again having to price in the risk that new attacks on shipping or a broader deterioration in US-Iran relations will slow the normalization of flows in the Strait of Hormuz,” said Saxo Bank analyst Ole Hansen.

The US airstrikes were in response to Iranian attacks on three commercial ships passing through the Strait of Hormuz, US Central Command said on Tuesday. Iran’s Revolutionary Guard later said they targeted US military facilities in Bahrain and Kuwait early on Wednesday.

The attacks have renewed concerns about tanker traffic in the Strait of Hormuz, which carried about a fifth of global energy supplies before the war broke out in late February.

“Trump’s claim that the Memorandum of Understanding has expired raises the possibility that the Strait will be closed again as the escalating cycle begins again,” said Sauk Kavoniv, head of research at MST Marquee.

Ship tracking data showed at least four oil and gas tankers turned back from trying to pass through the strait as new attacks on ships raised security concerns.

“The underlying supply problem has not gone away, but the latest surge has disrupted it,” Hansen added.

After the United States and Iran signed a ceasefire last month, oil prices fell to pre-war levels and traders accumulated large short positions in oil futures, suspecting prices would fall further.

Since the beginning of the conflict, countries have reduced their stocks to close the supply gap.

“In my view, a price closer to $80 per barrel is more consistent with current market fundamentals than $70,” said Bjarne Schieldrop, SEB chief commodities analyst.

Meanwhile, China lifted refined fuel export restrictions for the rest of July and allowed a private refinery to resume shipments after a four-month halt, as the world’s largest refinery returned to normal after disruptions from the Iran war, trade sources said on Wednesday.

(Reporting by Anushree Mukherjee in Bengaluru, Yuka Obayashi in Tokyo and Jeslyn Lerh in Singapore. Additional reporting by Florence Tan in Singapore. Editing by Joe Bavier, Aidan Lewis and Mark Potter)