By Ronnie Harui


Oil prices rose in Asia amid renewed fears of supply disruptions in the Middle East as the U.S. and Iran exchanged airstrikes, threatening the fragile interim peace deal between the two countries.

The U.S. struck sites along Iran's coast and blocked its ability to sell oil legally on Tuesday following Tehran's recent attacks on ships near the Strait of Hormuz, a key waterway through which one-fifth of the world's oil is transported. Iran responded by firing drones and ballistic missiles at Bahrain and Kuwait, which host U.S. bases and have accommodated the U.S. military throughout the war, according to a senior U.S. official.

The attacks mark the strongest escalation since the U.S. and Iran signed a memorandum of understanding on June 17 to reopen the strait and end their conflict. The Treasury Department said the temporary license granted to Iran allowing the Middle Eastern country to sell oil on the open market would no longer be valid, after the Islamic Revolutionary Guard Corps fired missiles and drones at ships near the strait on Tuesday.

"The ship attacks underscore the risks around timely resumption in oil flows," Commonwealth Bank of Australia's John Oh said in a report. Also, "the reported attack on a Qatari LNG carrier on waters off the Omani coast raises risks on whether safe passage through the strait along the Omani coast can continue to be maintained," the sustainable and energy economist said.

The exchange of attacks fueled concerns about the flow of oil through the Strait of Hormuz, pushing crude oil prices even higher Wednesday afternoon. Front-month West Texas Intermediate crude oil futures were recently up 3.3% at $72.75 a barrel, and front-month Brent crude oil futures increased 3.3% to $76.58 a barrel, ICE data showed.

Equity markets across the Asia-Pacific region were mixed following Wall Street's losses Tuesday, led by the tech-heavy Nasdaq Composite. Hong Kong's Hang Seng Index rose 3.1% and China's Shanghai Composite Index was roughly flat, while Japan's Nikkei Stock Average fell 1.6% and Taiwan's benchmark Taiex added 0.6%.

South Korea's Kospi was recently 5.5% lower after earlier swinging between gains and losses, with defense and chip stocks leading the decline. The Korea Exchange briefly activated trading curbs on both the Kospi and smaller tech-heavy Kosdaq markets.

"The dominant theme for equities has been the rotation out of chip makers," Skye Masters, head of markets research at National Australia Bank, said in a commentary. "Having finished the best-ever quarter, chip stocks have seen strong selling pressure, with the Philadelphia Semiconductor Index down overnight, as investors realize some profits and rotate into other sectors."


Write to Ronnie Harui at ronnie.harui@wsj.com


(END) Dow Jones Newswires

07-08-26 0227ET