Oil prices jumped Wednesday morning after President Trump declared the Iran ceasefire "over" during the NATO summit in Ankara.
President Trump said he did not want "to deal" with Tehran anymore, called them "They're scum," and said negotiations can continue but are "a waste of time."
Brent crude traded at $77.53 per barrel Wednesday morning, about $5 above where it began the week after increases Tuesday and Wednesday.
Trump's comments followed the U.S. conducting a new round of strikes on Iran, which were retaliation for renewed Iranian attacks on commercial ships in the Strait of Hormuz.
The price jump suggested markets are not pricing in a full re-escalation, with Brent far below spring levels when it briefly touched $126 in April, and substantial volumes of oil have flowed on tankers out of the region in recent weeks, improving market balances.
"Even if no sustained physical disruption materializes, uncertainty around vessel safety, insurance costs, potential delays, and the risk of further retaliation is likely to keep volatility elevated in the near term," Rystad Energy said, adding that "Traffic through the strait will almost certainly remain reduced until the security situation becomes clearer and market participants gain more visibility on whether a diplomatic off-ramp remains available."
On Tuesday the Treasury Department announced it had revoked the temporary waivers issued under the memorandum of understanding with Iran that had allowed Tehran to sell oil; Javier Blas said that still enables significant Iranian sales, and ING analysts said the revocation is important from a sentiment perspective by showing risks that the U.S.-Iran agreement breaks down.
A sustained oil price rise could cause U.S. gasoline prices, which have been falling for weeks, to start rising anew.