Oil prices rose on Friday in Asia after the US and Iran exchanged fire in the key Strait of Hormuz waterway.
The US military said it intercepted what it called “unprovoked” Iranian attacks – including missiles, drones and small boats – and carried out self‑defence strikes as its ships were heading out of the Gulf through the strait.
In mid-morning trade, global oil benchmark Brent was up by 1.5% at $101.60 (£74.50) a barrel, as it eased back from a gain of more than 2% earlier in the session. US-traded oil was 1.1% higher at $95.87.
It came after President Donald Trump said the US-Iran ceasefire, which he extended indefinitely on 21 April to allow more time for peace talks, was still in place.
After the strikes, Trump told reporters that negotiations with Iran are ongoing, repeating Washington’s demand that Tehran must never have a nuclear weapon.
“The talks are going very well, but they have to understand if it doesn’t get signed, they’re going to have a lot of pain”, he said.
“I believe they want the deal more than I do.”
Oil prices have risen again due to concerns that military action along the Strait of Hormuz could further threaten energy shipments through the crucial trade route, said associate professor Jiajia Yang from Australia’s James Cook University.
Traders view the ceasefire as “fragile” and have reacted accordingly, even as the US and Iran play down tensions, said National University of Singapore economics researcher Huifeng Chang.
Trump told reporters that three US destroyers were involved in the latest exchange of fire.
Several Iranian small boats had been “completely destroyed” and missiles that had targeted the US ships were “easily knocked down”, he said on social media.
Iran’s military accused the US of violating the ceasefire by targeting its ships, including an oil tanker, that were moving towards the Strait of Hormuz, according to Islamic Republic of Iran Broadcasting.
It said “aerial attacks” were also carried out along the coastline near the strait, prompting Iranian forces to respond by attacking the US military vessels, inflicting “significant damage.”
The US military has denied that its ships had been hit.
US Central Command also said it was not seeking to escalate the conflict.
Iranian state media later reported that the situation “is back to normal now”.
Trump also told ABC News that the Iran strikes were “just a love tap”.
This week, Trump said that the war, which started on 28 February when the US and Israel attacked Iran, will be “over quickly” as Washington pushes for a framework for more detailed negotiations with Tehran.
Energy prices have surged since the start of the conflict after Iran threatened to attack ships in the critical Strait of Hormuz trade route in retaliation to the US-Israeli strikes.
More than a fifth of the world’s oil and gas shipments usually pass through the waterway.
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