Oil price hits $100 as Brent Crude rises over 4 per cent. Will rate go further up?

Oil prices rebounded back to $100 on Tuesday while stock markets were mixed and the dollar firmed after US military strikes on Iran deflated hopes of an imminent deal to reopen the Strait of Hormuz. Brent crude futures climbed about 4 per cent on Tuesday after the U.S. military carried out strikes in Iran, adding to uncertainty over whether a deal would be reached soon to end the war and open up shipping flows through the Strait of Hormuz. Iran has effectively halted nearly all non-Iranian shipping into and out of the Gulf via the Strait of Hormuz since the war began in late February, choking off about a fifth of global oil and liquefied natural gas (LNG) flows. Global benchmark Brent rose $3.96, or 4.1 per cent, to $100.10 a ‌barrel, while U.S. West Texas Intermediate (WTI) crude fell $2.46, or 2.6 per cent, to $94.14.

The United States and Iran have been working on an agreement to end the Middle East war and reopen the crucial waterway to tanker and cargo traffic since a fragile ceasefire on April 8.

But the fresh strikes had Tehran warning it was ready to retaliate after it accused Washington of breaching their truce with what US Central Command described as "self-defence strikes".


Stock markets had rallied Monday and crude futures dropped below $100 a barrel after reports that a deal might come within days.

That was before US forces said they had attacked missile sites in southern Iran and boats trying to lay mines.

Brent North Sea crude, the international benchmark, jumped almost 4.5 percent Tuesday to edge back above $100 a barrel.

Oil price increases had been modest beforehand, "underlining the market's strong belief that the Strait of Hormuz will reopen" said Arne Lohmann Rasmussen, a commodities analyst at Global Risk Management.

Equity markets were mixed with the Dow just off but the tech-heavy Nasdaq and the S&P 500 in the green two hours into trading.

In Europe, Frankfurt and Paris closed off around one percent with London ending just 0.2 percent ahead as traders returned after a long holiday weekend in Britain.

British oil giant BP topped the losers' chart, off more than four percent after it unexpectedly removed Albert Manifold as chairman only months into his tenure, citing "serious concerns" about governance standards, oversight and conduct at the company.

Kathleen Brooks, research director at XTB, warned that Manifold's departure, coming barely three years after former CEO Bernard Looney was replaced over allegations of misconduct, "suggests a lack of stability at the firm, which is bad news for shareholders".

AJ Bell investment director Russ Mould focused on the Iran situation as he noted that "continued doubts about the potential for a deal and an overnight pre-emptive US strike on Iran mean any euphoria is being kept in check," his concerns echoed by Brooks.

The US strikes came as top Iranian negotiators arrived in Doha for another round of talks to end three months of conflict, and as the Israeli military stepped up hostilities with Iran-backed Hezbollah in southern Lebanon.

In Asia, Seoul's stock market hit a new record high above 8,000 points as chipmakers, carmakers and shipbuilders continued to outperform.

In Europe, investors were quick to express disappointment at Ferrari's unveiling of its first electric model, with shares in the Italian luxury carmaker skidding six percent.