Oil prices extend rally as US and Iran step up mutual attacks

The sudden flare-up has stoked concerns about peace talks between the foes as they look to end their conflict and fully reopen the crucial waterway.

It added to the largely dour mood in Asia, where Seoul suffered another tech rout amid questions over stretched valuations and when companies will start realising profits from their eye-watering AI investments.

US and Iranian forces reported hitting dozens of targets, putting more strain on an interim deal to end the Middle East war, while Washington revoked a temporary sanctions waiver for Iranian oil.

Washington revoked the waiver and launched the new attacks on military sites in what the US military called retaliation for Iran's strikes on three commercial ships in the Strait of Hormuz.

Iranian state media reported a wave of explosions around the strait, while the country's Revolutionary Guards said they had hit dozens of US military facilities in Bahrain and Kuwait.

The three vessels were struck close to Oman, which had proposed a temporary transit corridor hugging its coastline -- an initiative opposed by Tehran as it seeks to impose fees on ships using the waterway.

Iran's foreign ministry accused the United States of repeatedly violating a memorandum of understanding agreed between the two sides.

Both main crude contracts jumped more than two percent on Wednesday -- having climbed a similar amount on Tuesday -- to two-week highs.

Andreas Krieg, a security expert at King's College London, said Iran was determined to stick to its demand of charging fees to use the strait, which Washington has said was not acceptable.

"We are now in a sensitive period where potential alternatives to an Iranian toll or fee system are being explored," he told AFP.

"Iran is sending a clear signal that no alternative will be accepted."

(With newswires)