Three vessels hit in Strait of Hormuz, oil prices tick higher

(Sharecast News) - Three vessels have been hit by gunfire in the Strait of Hormuz, maritime sources confirmed on Wednesday.

According the United Kingdom Maritime Trade Operations, a Liberia-flagged container ship sustained damage to its bridge after being approached by an Iranian Revolutionary Guard north east of Oman. A Panama-flagged vessel was also fired on about eight nautical miles west of Iran, but was not damaged. Reuters, citing maritime security sources, reported that a third container ship was also fired on but again, was not damaged.

The crews of all vessels are understood to be safe.

The attacks are the latest development in a volatile week notable for its mixed messaging.

Donald Trump started the week insisting he would not extend the fragile ceasefire between Washington and Tehran, which had been due to end on Wednesday. He also told Bloomberg he would not be rushed into a permanent peace deal, claiming "we've got all the time in the world".

Tehran, meanwhile, refused to say if it would attend the proposed talks in Islamabad.

However, just 24 hours later and Trump said he would extend the ceasefire, claiming it was because Iran's government was "seriously fractured" and that Pakistan had requested it.

He also confirmed that the US would continue its blockade of Iranian ships in the Strait of Hormuz. Iran, meanwhile, said on Wednesday it had seized two commercial ships and escorted them into its territorial waters, although the claims were not immediately verified.

In a matter of days, benchmark Brent crude has retreated sharply - including tumbling to $86 a barrel on Friday - before rebounding to more than $100 as markets try to keep pace with the various developments.

As at noon BST, Brent was 1% higher at $99.27, while West Texas Intermediate was up 1% at $90.28.

David Morrison, senior market analyst at Trade Nation, said: "There are concerns [the extended ceasefire] will simply extend the duration of the conflict, and the Iranian regime seems in no mood to reopen peace negotiations.

"This could be a bluff, and much will now depend on the effectiveness, or otherwise, of the US blockade. But as Tehran refuses to come to the table while the US blockade is in place, while continuing to fire on shipping attempting to transit the Strait, the probability increases that this war could last well beyond the end of this month."

Joshua Mahony, chief market analyst at Scope Markets, said: "Trump's decision to extend in the absence of any tangible talks highlights just how weak his position currently his. Despite warning that he won't extend, this time round he can't even say that he has seen any progress that provides the basis for this concession.

"[The president's] threats appear empty, and in the absence of any negotiations, it is down to Trump to concede further or escalate. For Iran, there is clarity that each passing day deals additional damage to the global economy, with US inflation on the rise and Trump's popularity waning."