Oil prices extend gains as US and Iran trade fresh strikes

Brent crude futures climbed $1.03, or 1.1 per cent, to $95.68 a barrel on Wednesday, building on Tuesday's rally after the US and Iran traded strikes overnight. The Express Tribune reported that the exchange marks the most serious escalation in weeks and has deepened concerns about supply disruption in the Middle East. West Texas Intermediate gained 61 cents, or 0.7 per cent, to $90.83 a barrel.

Washington said it struck several Iranian targets overnight, drawing a response from Tehran. The Islamic Revolutionary Guard Corps said the attacks would tighten traffic through the Strait of Hormuz, a waterway Iran has largely shut to commercial vessels. Jordan's military said air defences downed 10 of the 13 ballistic missiles that crossed into its airspace, while two US officials reported no American casualties so far.

The latest clash followed a weekend flare-up, the first since July, and attacks on two tankers leaving the Strait on Monday. ING analysts noted that escalating hostilities threaten passage through the waterway, while Phillip Nova's Priyanka Sachdeva said traders are now factoring in the expense of a conflict that remains unsettled. Separately, US crude inventories fell 2.6 million barrels in the week ended August 28, according to the American Petroleum Institute.