Oil prices surged near multi-week highs on Thursday after US President Donald Trump called the US-Iran ceasefire "over," following US military strikes against Iranian targets triggered by renewed attacks on commercial shipping in the Strait of Hormuz.
Brent crude futures steadied at $78.03 per barrel after briefly hitting over $80 a barrel in the previous session, its highest since June 22, while Murban crude futures held steady at $73.85/bbl and hit their highest since June 17 on Wednesday.
Trump said that as far as he is concerned, the Pakistan-mediated interim MOU with Iran is "over," dismissing the fragile ceasefire accord as "a waste of time."
Speaking ahead of a NATO summit in Turkey, Trump's rhetoric signaled a sharp escalation in Middle East military actions. However, analysts cautioned that the remarks may not entirely preclude future diplomatic maneuvers.
Trump's remarks on Wednesday that the MOU with Iran was over do not necessarily signal the end of negotiations between the two countries, and little should be read into them until more clarity emerges, energy sector analysts told.
On the geopolitical front, the US Central Command said it launched a second consecutive day of targeted airstrikes against Iran, acting under direct presidential instructions.
"The disruption is a reminder that the Strait never fully reopened and that the recent removal of the geopolitical risk premium may have been premature," Saxo Bank analysts said.
Saxo Bank analysts further added that the abrupt rally was accelerated by heavy short covering, as hedge funds had been holding unusually low bullish exposure and elevated short positions prior to the flare-up.
Shipping data reportedly indicated that most active vessel movements have been compressed along an Iran-approved route hugging the waterway's northern coastline. Conversely, the US-backed Omani maritime corridor, which serves as the location of recent Iranian attacks, remained largely quiet.
Investment bank Macquarie emphasized that diplomacy over the control of this vital waterway will ultimately dictate whether the current energy crisis persists or stabilizes.
Meanwhile, Pakistan's Ministry of Foreign Affairs issued an urgent call for maximum restraint and a swift return to diplomacy, warning that "a renewed conflict is in no one's interest."