Oil Jumps More Than $4 After Israel, Iran Exchange Strikes

Oil prices shot up by more than $4 on June 8, after investors reacted to Israeli strikes on Iran and renewed attacks on Lebanon.

Brent crude futures jumped more than 4 percent to above $97 per barrel in early trading, reversing a two-session decline as investors balked at the flare-up of hostilities

Israel said on June 8 that it hit a petrochemical plant in the Mahshahr area located in Iran’s southwest, along with strikes elsewhere on military targets, dampening hopes that a deal to end the war would soon be reached between the Jewish State, along with its ally the United States, and Tehran.

Iran’s Islamic Revolutionary Guard Corps (IRGC) said on June 8 that it responded by targeting Israel’s Ramat David airbase with ballistic missiles, the semi-official Fars News Agency reported.

Tehran warned that additional Israeli strikes could trigger a broader response from its military.

The price rise on June 8 erased earlier declines, which had fallen amid hopes of a de-escalation of the conflict. Oil prices have climbed by just under 60 percent since the start of the war in late February but remain below earlier jumps, which saw Brent briefly spike to a four-year high of more than $126 dollars in April.

The strike on the Mahshahr petrochemical complex marked the first hit on an energy site inside Iran since the April 8 ceasefire was agreed.

A local official said that parts of the plant were damaged, Iranian outlet Tabnak reported, citing the semi-official Fars news agency.

Explosions were heard in several areas, including Isfahan, Karaj, Tabriz, and Tehran, prompting Iran to close the airspace around Imam Khomeini International Airport in Tehran, according to state television.

Hopes are now eroding for an imminent end to the wider war and a restart to crude flows through the Strait of Hormuz, through which roughly a fifth of the world’s oil and liquefied natural gas passes.

The strikes came just hours after U.S. President Donald Trump urged Israeli Prime Minister Benjamin Netanyahu not to retaliate against Iran after its regime fired a barrage of missiles at Israel late on June 7.

“I am going to call Bibi right now and tell him not to retaliate. Each of them had their fun. Israel had its strike, and Iran had its strike. We don’t need another one,” Trump told Axios.

“We are very close to a final deal with Iran,” the president said. “It is going to be a good deal. I don’t want it to blow up because of what is happening now.”

On Sunday, Iran fired a salvo of missiles at Israeli targets in retaliation for the strikes on Lebanon. Even so, Trump insisted that an agreement to end the wider war remains well within reach.

Iran has made a ceasefire with Lebanon a condition for a peace deal with Washington.

Israel invaded Lebanon in March after Iran-backed Hezbollah fired rockets and drones across the border. Lebanon and Israel said on June 3 that they had agreed to a ceasefire following negotiations in Washington.

Trump, in a June 8 post on Truth Social, said that Israel and Iran must “immediately stop ‘shooting’.”

In a later post on the same platform, the president said that both sides are seeking an “immediate CEASEFIRE.”

“Final negotiations on ‘Peace’ are proceeding, subject to ignorance or stupidity getting in its way,” Trump said.

“The Blockade will remain in place, and in full force and effect, until a ‘Final Deal’ is reached. Things should move quickly.”

OPEC+ Ups Output

Amid the ongoing oil supply crisis, OPEC+ agreed to its fourth output increase in four months on June 7.

However, Jorge Leon, an ​analyst at Rystad and a former OPEC official, said that the increase in production “means very little” while the Strait of Hormuz remains blocked.

“When the Strait of Hormuz reopens, the market could move very quickly from fear of shortage to fear of ‌surplus,” he said.

Iran Says Hormuz Will Open Under ‘New Conditions’

Commenting on the situation in the Strait of Hormuz, Iranian ambassador to Moscow Kazem Jalali said the waterway will be opened but under new conditions set by Iran and Oman, including a transit fee, in remarks published on June 8.

“Naturally, this strait will be opened, but under new conditions, which will be determined by the Iranian and Omani authorities,” Jalali told Russian newspaper Izvestia.

“This is what is currently being discussed. We understand that Iran and Oman provide certain services within this strait. And a fee will be charged for these services. We will see and understand in the future what the fate of this strait will be,” he added, without going into specifics.

The United States has said it opposes any tolling system or service fee being instituted in the Strait of Hormuz.

Reuters and T.J. Muscaro contributed to this report.