Oil Prices Rise After Tanker Struck Off Saudi Arabia Amid US-Iran Escalation

Oil prices rose Thursday after a tanker was struck by an unknown projectile off Saudi Arabia and as U.S. President Donald Trump threatened to bomb Iranian infrastructure.

The United Kingdom Maritime Trade Operations on Thursday Asia time posted on social media platform X that a tanker was hit around 70 nautical miles southwest of Al Shuqaiq. The strike sparked a fire onboard that the crew was fighting, although there were no reported casualties.

Brent crude futures for September delivery gained 1.6% to $95.61 per barrel. U.S. West Texas Intermediate crude futures advanced around 1.04% to $87.72 per barrel.

The attack came hours after Trump warned the U.S. would destroy an Iranian bridge or power plant each time Tehran attacks a ship in the Strait of Hormuz, signaling a further escalation in tensions following the collapse of the U.S.-Iran ceasefire.

"From this point forward, any time the Islamic Republic of Iran shoots at a ship in the Strait of Hormuz, whether it be by Missile, Rocket, Drone, or any other device or weapon, the United States will bomb and destroy ONE BRIDGE OR POWER PLANT," Trump said.

Iran responded by warning it would retaliate against U.S.-linked infrastructure and energy assets across the region if Washington carried out those strikes.

"If the Americans target a bridge or a power plant in Iran, Iran will, in turn, strike infrastructure and bridges in the region, including energy facilities where the United States has interests," an unnamed Iranian military source told state-run Tasnim News Agency.

Earlier on Wednesday, Secretary of State Marco Rubio said Iran was not being "serious" about reaching an agreement with Washington, while maintaining that the U.S. remained "committed to diplomacy" in the Middle East.

The recent rally in oil reflects renewed concerns over the Strait of Hormuz after the breakdown of the U.S.-Iran ceasefire, HSBC said in a note late Wednesday, warning that the outlook now hinges on whether diplomacy can restore predictable shipping flows.

"Since 7-8 July, the ceasefire has frayed as Iranian attacks on vessels transiting the strait of Hormuz prompted U.S. retaliatory strikes," said Kim Fustier, the bank's senior global oil and gas analyst.

"The core issue remains unresolved: whether passage is administered, and by whom. In hindsight, the more traffic was rising through the US-managed Omani lane, the less this outcome suited Iran," added Fustier.