🚨 Oil Prices Surge Over 3% Following US-Iran Escalation

Global oil benchmarks jumped significantly following a brief drop in the previous session, triggered by renewed military hostilities between the US and Iran. • Market Impact: Brent crude futures for July surged by US$ 3.51 (3.72%) to US$ 97.8 a barrel, while the more active August contract gained US$ 3.35 (3.63%) to reach US$ 95.6. US West Texas Intermediate (WTI) futures rose by US$ 3.31 (3.73%) to US$ 91.99. • Geopolitical Drivers: The surge follows a retaliatory strike by Iran's Revolutionary Guards on a US airbase. This came after a US military strike near Bandar Abbas airport targeting an Iranian military site deemed a threat to US forces and commercial shipping in the strategic Strait of Hormuz. • Supply Constraints: The escalation disrupts prior market optimism regarding a potential deal to reopen the Strait of Hormuz. Analysts note that global oil supply remains heavily constrained with unresolved geopolitical sticking points. • Inventory Data: Supporting the tight supply outlook, provisional American Petroleum Institute (API) data showed US crude oil stockpiles fell by 2.8 million barrels last week, marking their sixth consecutive week of declines. _Context for Sri Lanka:_ As a net oil-importing nation, sharp increases in global energy commodities typically exert pressure on Sri Lanka's foreign exchange reserves, import bills, and domestic retail fuel pricing structures.