BP shares jumped on Wednesday after fresh US military strikes on Iran sent the price of Brent crude surging, reviving fears of a wider Middle East conflict.
BP led the FTSE 100 higher after renewed fighting between the United States and Iran pushed oil prices sharply higher, reviving concerns about disruption to Middle East crude supplies.
BP shares are trading at 491.65p, up 3.6% on the session from Tuesday’s close of 474.55p. The stock touched an intraday high of 492.6p on Wednesday and has traded in a range of roughly 362p to 602p over the past year.
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Strikes Reignite Supply Fears
According to Reuters, Brent crude jumped more than 5% to $77.98 a barrel, its highest level since 23 June, after President Donald Trump said the agreement to end the conflict with Iran was “over”. US Central Command said its forces struck more than 80 targets in Iran overnight, and Washington revoked the licence that had allowed Iran to resume exports of crude. Iran’s Revolutionary Guards said they had targeted US military sites in Bahrain and Kuwait, and Tehran vowed a “decisive” response.
The renewed strikes mark the latest flare-up in a conflict that had briefly pushed Brent above $100 a barrel earlier this year before a ceasefire last month sent prices back toward pre-war levels, according to Reuters. This latest escalation, coming just weeks after that truce, has put a geopolitical risk premium back into crude.
BP’s gain put it at the top of the FTSE 100 leaderboard on Wednesday, with Shell up 1.7% and smaller producers including Harbour Energy and Ithaca Energy also higher.
Deutsche Bank strategist Jim Reid said the latest developments had “reignited concerns about energy supplies and geopolitical risk”, noting that attacks on shipping in the Strait of Hormuz had reached their highest level since the US-Iran interim agreement took effect on 17 June. Saxo strategist Neil Wilson said “with oil longs cleared out there is scope for another rally here,” though he added that avoiding a wider escalation remained in both sides’ interests.
Markets will now watch whether Iran follows through on its pledge of retaliation and whether tanker traffic through the Strait of Hormuz, which carries a significant share of global energy supply, comes under renewed pressure. With BP and its rivals now trading on the same geopolitical risk premium that dominated markets earlier this year, the durability of Wednesday’s rally will hinge on how far this latest escalation is allowed to run.