Oil prices extended their sharp rally on Wednesday, rising nearly 1 per cent in early trade as the latest US-Iran military escalation heightened fears that disruptions to crude supplies could worsen.Brent crude futures rose 87 cents, or 0.92 per cent, to $95.52 a barrel by 0008 GMT, while US West Texas Intermediate crude gained 80 cents, or 0.89 per cent, to $91.02. The move came after both benchmarks surged more than $4 on Tuesday. Brent recorded its biggest daily gain since July 24, while WTI posted its strongest rise since July 23.A key concern for oil markets is the Strait of Hormuz, through which around one-fifth of the world’s oil consumption passed before the conflict. Iran has effectively shut the waterway to commercial shipping, while attacks on two tankers leaving the strait on Monday have already forced traders to seek alternative crude supplies.The latest US-Iran exchange has raised the risk of further disruption. The United States said it carried out a series of overnight airstrikes against targets in Iran, while Tehran responded with attacks on US military positions across the region. US Central Command said the strikes followed attempted attacks by Iran’s Islamic Revolutionary Guard Corps (IRGC) on commercial shipping in the Strait of Hormuz and US personnel in the region.The IRGC warned that the US strikes would further restrict traffic through the strategic waterway. It also said Iran had targeted a US base in Jordan with ballistic missiles. Iranian state media separately reported a large-scale drone attack on a US base in Bahrain.Jordan said its air defences intercepted 10 of 13 ballistic missiles that entered its airspace. Two US officials said there were no reported American casualties from the attacks so far, while Kuwait said its armed forces were dealing with hostile drone activity.The escalation follows a weekend flare-up in fighting, the first since July, adding to uncertainty over the security of oil shipments from the region.US inventory data provided another source of support for crude prices. Oil stocks in the world’s largest producer fell by 2.6 million barrels in the week ended August 28, while distillate inventories, including diesel and heating oil, declined by 265,000 barrels, according to market sources citing American Petroleum Institute data.
