Crude prices surged after fresh military strikes between the US and Iran threatened to dismantle a fragile maritime truce in the Persian Gulf, raising fears of renewed supply disruptions, RBC Capital Markets strategists said in a note on Wednesday.
RBC analysts said Brent crude rose after President Trump declared that the ceasefire between the US and Iran was over, following a new round of Iranian attacks on Saudi and Qatari vessels and subsequent US retaliatory strikes.
The latest escalation marks a more serious deterioration than previous flare-ups following the memorandum of understanding that had helped ease tensions in the Gulf.
Iranian drone and missile strikes also targeted Kuwait and Bahrain following US military action, raising concerns that the conflict could once again disrupt energy flows from one of the world's most important oil-exporting regions.
RBC said the key question is whether these attacks will trigger a more serious resumption of fighting or be followed by another tenuous truce.
The bank said that investors are closely watching whether the US follows through on threats to reinstate a naval blockade of Iran, a move that would reverse one of the most significant economic benefits Tehran gained under the MoU.
However, despite the agreement, shipping activity through the Strait of Hormuz remains well below pre-war levels. RBC projects that vessels have averaged about 34 daily transits since the MOU was signed, compared with more than 100 vessels a day before the conflict erupted.
The reduced flows have nevertheless enabled over 120 million barrels of crude and products to leave the Gulf, while a projected 8 million barrels per day to 9 million b/d of production remain offline.
RBC said the renewed attacks are likely to limit any further recovery in shipping traffic through the Strait of Hormuz, where maritime operators continue to face heightened security risks.
The bank said that the possibility of a major accident, particularly involving an LNG tanker, could discourage large Western and Japanese shipping companies from returning to the route.
Compounding the risks, RBC said Iran continues to mine parts of the central shipping corridor through the Hormuz, leaving vessels to choose between using the narrower Omani channel while facing potential military attacks.
The latest tensions come as China moves to ease restrictions on refined product exports, a step that RBC analysts said allows Chinese refiners to increase purchases of Iranian crude if supplies remain available.