Escalating hostilities between the United States and Iran have placed a fragile ceasefire under severe strain, potentially prolonging a Middle East conflict that continues to disrupt global markets, sending oil prices sharply higher.

West Texas Intermediate crude surged as much as 2.7% to $92.45 a barrel during the session, building on gains of over 2% from the previous close. Brent crude traded near $93. The moves followed a statement from the US military confirming strikes on "multiple" targets for a second consecutive day, coming after President Trump accused Iran of stalling negotiations for an interim peace deal.

Iran has vowed a firm response to any threats. In the early hours local time, the Central Command of Iran's Armed Forces issued a declaration, citing the volatile regional security situation, that the Strait of Hormuz is closed to all vessels, including oil tankers and commercial ships, effective immediately. Any vessel attempting passage will be subject to attack, the statement warned.

The closure of this critical waterway since the outbreak of war in late February has already severed supplies of crude oil, fuel, and natural gas.

US Launches Fresh Strikes, Oil Prices Jump

"The coming days will be critical in determining whether diplomacy can regain its role or if the conflict moves into a more sustained cycle of escalation," said Jorge Leon, Head of Geopolitical Analysis at consultancy Rystad Energy. "Oil volatility is likely to remain elevated until there is clearer evidence that a ceasefire is holding."

US Central Command stated it had initiated "additional defensive strikes" in response to Iran's "unprovoked and ongoing aggression." These latest actions follow Iranian retaliatory strikes on US military facilities in Bahrain, Jordan, and Kuwait, which were themselves a response to US attacks on Tuesday prompted by the downing of a helicopter.

In a social media post later on Wednesday, President Trump claimed that US forces had escorted "more than 200 merchant ships" through the Strait of Hormuz, allowing "over 100 million barrels of oil" to reach the market. He further asserted that control of the strait lies with the United States, "not Iran."

While some oil shipments have managed to depart the Persian Gulf under cover of darkness and spot markets show some signs of adequate supply, the disruption to Middle Eastern logistics continues to push energy prices higher—including US gasoline prices—and stoke concerns over slowing economic growth.

Separately, data released by the US government on Wednesday showed US crude inventories fell by 7.2 million barrels last week, marking a seventh consecutive weekly draw. Supplies at the Cushing, Oklahoma, hub also edged lower.

Gold Faces Panic Selling

Meanwhile, gold prices opened lower for a third consecutive day. The latest clashes risk extending a war that has unsettled global markets and fueled inflation worries.

Spot gold fell as much as 0.9% in early trading to around $4,036 an ounce, following a 4.4% decline in the previous session.

The recent attacks underscore President Trump's growing impatience with the lack of a negotiated settlement. The four-month-old war has disrupted energy flows via the Strait of Hormuz, driving up oil prices and increasing the likelihood of further interest rate hikes as central banks work to contain inflation.

Data from the US Bureau of Labor Statistics on Wednesday showed US inflation in May accelerated at its fastest pace in over three years, outstripping wage growth for Americans, as the war pushed energy costs higher. The Consumer Price Index rose 0.5% from April and was up 4.2% from a year ago, the largest annual increase since early 2023.

Gold is now trading more than one-fifth below its price level before the Iran war broke out in late February. A recent breach below the 200-day moving average—a widely watched long-term trend indicator—triggered additional selling pressure as institutional investors view this level as a key threshold.

At the time of writing, spot gold was down 0.9% at $4,036.66 an ounce. Spot silver fell 1.4% to $62.46. Platinum and palladium prices also moved lower.