Oil prices extended sharp gains in Asian trading Wednesday, fueled by escalating tensions between the U.S., Israel, and Iran. Brent crude futures rose 1% to $82.21 per barrel, while West Texas Intermediate (WTI) crude gained 0.7% to $75.07. Both benchmarks closed nearly 5% higher Tuesday, with Brent breaching $85 per barrel for the first time since July 2024. The conflict, sparked by U.S. and Israeli strikes on Iranian targets, has kept supply disruption risks paramount.

Iran retaliated by threatening to attack vessels through the Strait of Hormuz, a critical oil transit route handling roughly a fifth of global shipments. Iran's threats to the Strait of Hormuz injected significant geopolitical risk into prices. ING analysts noted reports that Iraq has begun shutting in production at its major Rumaila and West Qurna 2 fields, taking 1.2 million barrels per day offline. While military escalation supported prices, President Trump's pledge to escort commercial vessels through the strait offered some relief, potentially tempering further gains. The Strait of Hormuz threat remains a key risk factor for the near term.