Oil rebounds after news of US strikes on Iranian military site

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NEW YORK, May 28 : Oil prices jumped about 2 per cent in early Thursday trading after Reuters reported fresh U.S. strikes overnight on an Iranian military site, escalating tensions even as Washington and Tehran negotiate to end their three-month conflict.

Brent crude futures rose $1.90, or 2.02 per cent, to $96.19 a barrel by 0015 GMT, while the more active August contract gained $1.64 or 1.78 per cent, to $93.89. The July contract is set to expire on Friday.

The U.S. West Texas Intermediate futures were up $1.73, or 1.95 per cent, at $90.41.

Both benchmarks slipped more than 5 per cent to touch their lowest in a month in the previous session on the possibility of a U.S.-Iran deal to end their war and reopen the Strait of Hormuz.

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The U.S. military launched new strikes in Iran targeting a military site that officials believed posed a threat to U.S. forces and commercial maritime traffic in the strait, a U.S. official told Reuters.

"Oil supply remains constrained, and key sticking points have yet to be resolved," ANZ commodity strategist Daniel Hynes said in a note.

In the U.S., crude oil stockpiles fell by 2.8 million barrels last week, the sixth straight week of declines, according to American Petroleum Institute data.

Official inventory data from the U.S. Energy Information Administration are due on Thursday, a day later than usual due to the Memorial Day holiday on Monday. [EIA/S][ENERGYUSA]

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