Oil jumps over 5% to two-week high after Trump says deal with Iran 'over'

By Anushree Mukherjee

July 8 (Reuters) - Oil prices jumped much than 5% connected Wednesday, hitting a two-week precocious aft U.S. President Donald Trump said the memorandum of knowing to extremity the struggle with Iran was "over", renewing ‌fears of disruptions to Middle East lipid supplies.

Brent crude futures were up $4.27, oregon 5.76%, to $78.43 a tube astatine ‌1127 GMT, portion U.S. West Texas Intermediate crude climbed $3.91, oregon 5.55%, to $74.35 a barrel. The benchmarks are astatine their highest levels since June 22.

Both roseate astir ​3% connected Tuesday aft the U.S. revoked the wide licence authorising the merchantability of Iranian crude.

Trump said connected Wednesday that the memorandum of knowing signed with Iran to extremity the struggle was "over", adding helium didn't privation to prosecute with Tehran.

The agreement, brokered by Pakistan past period to supply a 60-day model for negotiations, came nether strain aft the U.S. launched caller strikes connected Iran.

"The marketplace is ‌again being forced to terms the hazard ⁠that renewed attacks connected shipping, oregon a broader breakdown successful U.S.-Iran relations, could dilatory the normalisation of flows done the Strait of Hormuz," Saxo Bank expert Ole Hansen said.

The U.S. airstrikes were successful ⁠response to Iranian attacks connected 3 commercialized vessels that were transiting the Strait of Hormuz, U.S. Central Command said connected Tuesday. Iran's Revolutionary Guards past said they targeted U.S. subject sites successful Bahrain and Kuwait aboriginal connected Wednesday.

The attacks renewed concerns astir tanker postulation done the ​Strait ​of Hormuz, which carried astir one-fifth of planetary vigor proviso earlier the ​war began successful precocious February.

The Brent crude three-month ‌timespread widened to $2.36 a barrel, its highest since June 16, extending its determination into backwardation aft trading successful contango arsenic precocious arsenic July 6, arsenic traders reassessed near-term proviso risks successful the Middle East. Backwardation, wherever punctual crude trades supra later-dated barrels, typically signals tighter near-term supply.

SUPPLY FEARS RESURFACE

"Trump's assertion that the MOU is implicit raises the imaginable of a re-closing of the Strait arsenic an escalatory rhythm begins again," Sauk Kavoniv, caput of probe astatine MST Marquee, said.

At slightest 4 lipid and state ‌tankers person turned backmost from attempting to transit the strait, ship-tracking information ​showed, arsenic renewed attacks connected vessels heightened information concerns.

After the U.S. and ​Iran signed their truce past month, lipid prices tumbled ​to pre-war levels and traders amassed ample abbreviated positions successful lipid futures, betting prices would autumn further.