BP PLC (LSE:BP.) and other oil producers led gains in London on Wednesday morning after crude prices climbed to a two-week high following fresh US military strikes on targets in Iran that renewed concerns over energy supplies through the Strait of Hormuz.
Brent crude rose 2.2% to $75.80 a barrel after earlier touching almost $77, its highest level in a fortnight.
BP shares rose 1.8% and Shell PLC (LSE:SHEL, NYSE:SHEL) added 0.8%. Among mid-cap and small cap names, Tullow Oil PLC (LSE:TLW) and Afentra plc (AIM:AET, OTC:STGAF, FRA:TB8A) both jumped over 3%, followed by the likes of Borders & Southern Petroleum (AIM:BOR), Diversified Energy Company PLC (LSE:DEC, NYSE:DEC), Gulf Keystone Petroleum Ltd (LSE:GKP), United Oil & Gas PLC (AIM:UOG, FRA:1UO), Harbour Energy PLC (LSE:HBR), Serica Energy PLC (AIM:SQZ), Ithaca Energy PLC (LSE:ITH) and others. Oil services companies like Hunting PLC (LSE:HTG) also climbed.
The latest moves came after US Central Command said military forces struck more than 80 targets in Iran, including command-and-control networks, coastal radar installations, anti-ship missile capabilities and vessels operated by the Islamic Revolutionary Guard Corps. Washington also revoked a waiver that had allowed Iran to restart oil exports.
Iran condemned the measures as a breach of the ceasefire agreed last month and pledged a “decisive” response, raising concerns that the conflict could again disrupt energy supplies from the Middle East.
Jim Reid, strategist at Deutsche Bank, said the developments had “reignited concerns about energy supplies and geopolitical risk”. He noted that attacks on commercial shipping in the Strait of Hormuz had reached their highest level since the US-Iran interim agreement came into effect on 17 June.
Neil Wilson, strategist at Saxo, said: “With oil longs cleared out there is scope for another rally here,” although he added it remained in both sides’ interests to avoid a wider escalation.
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