Brent rises 2% after US strikes on Iranian boats, missile launch sites

Oil drilling rigs

Brent crude futures rose nearly 2% in early Asian trading today, May 26, after the US military launched attacks in southern Iran that it described as defensive operations. This kept the markets on the edge as the two sides struggled to reach an agreement to end the war.

Brent crude futures rose $1.40, or 1.5%, to $97.56 a barrel by 00:06 GMT, after falling 7% in the previous session.

US West Texas Intermediate crude futures rose slightly to $91.25 a barrel, but were down $5.30, or 5.5%, compared with Friday's settlement prices.

There were no closing prices on Monday due to the Memorial Day holiday in the US.

The US Central Command said it launched attacks in southern Iran targeting boats that were trying to plant mines and missile launch sites, adding that the strikes were intended to "protect our forces from threats posed by Iranian forces."

Iranian media reported on Monday hearing explosions in Bandar Abbas and nearby coastal areas along the Strait of Hormuz.

Iran’s chief negotiator and foreign minister visited Doha on Monday for talks with Qatar’s Prime Minister about a possible deal with the US to end the three-month-long war.

Washington and Tehran announced progress on a memorandum of understanding to end the war and gave negotiators 60 days to reach a final agreement.

The Japanese newspaper Nikkei quoted a Middle Eastern diplomatic source as saying that Iran would remove mines from the Strait of Hormuz within 30 days of reaching an agreement, after which ships from all countries would be able to sail freely and safely. Tehran will also reportedly cease to collect transit fees.

Tim Waterer, Senior Market Analyst at KCM Trade, said: "Traders are betting heavily that this breakthrough will finally free the oil tankers that have been stuck in and around the Strait of Hormuz for so long."