Crude extends rally as US-Iran flare-up rocks peace hopes

• US revokes Iranian oil sanctions waiver, fuelling crude rally.
• Trump warns of harsher action if Iran attacks Strait Hormuz.
• Asian stocks gain despite renewed Iran-US conflict fears.

Oil prices extended their surge on Thursday as Donald Trump said the US ceasefire with Iran was over and ordered fresh strikes against the country following attacks on ships in the Strait of Hormuz.

Both main contracts soared around 8%, with Brent topping $80 a barrel for the first time in two weeks, fanning fresh fears of a spike in inflation and a hit to the economy.

US West Texas ​Intermediate crude futures were trading at $74.52 a barrel. Washington also revoked a temporary sanctions waiver for Iranian oil.

However, equity markets mostly rose with tech firms seeing a touch of bargain-buying, with Seoul and Tokyo enjoying healthy gains in early trade.

Crude soared on Wednesday when the US president — in response to tit-for-tat attacks in the region already taking place — said the fragile truce between the foes was over.

Trump ordered new strikes on Wednesday and warned of "much worse" if Tehran continues to attack vessels in the strait, through which a fifth of world oil usually passes.

"This is in retribution for yesterday's bombing of ships by Iran," he said in a post on Truth Social.

However, the US president said earlier that he expected the latest military flare-up to end quickly and left the door open to more talks.

He also claimed Tehran had "called a little while ago" and that the Iranians wanted "to make a deal so badly", but did not provide further details of the call — including who was on the line.

He then went on to cast doubt over the value of any deal, calling the Iranians "sort of crazy".

"Trump's remarks set sparks flying — the comments underscored fears that we could see further escalation and a return to pre-MOU conditions," said Neil Wilson at Saxo Markets, referring to the memorandum of understanding that paved the way for peace talks.

But he added: "For what it's worth, I don't think this is the base case as A) Trump is wont to throw around threats and B) both sides need to return to a kind of hazy pre-war 'normality'.

"But it clearly seems the risk of a total breakdown in negotiations has increased and markets are reflecting this fresh dynamic."

Stock markets were largely higher but sentiment remains subdued as the latest pickup in geopolitical tensions comes after an extended period of selling in the tech sector fuelled by worries over extended valuations and when AI investments will see returns.

Seoul — the poster child of Asia's AI-led tech boom this year — added nearly 2% but remains susceptible to another pull-back, having already tanked more than 20% from its record high touched on June 19.