Oil prices rose more than a dollar a barrel in post-settlement trade on Wednesday after the U.S. military began launching fresh strikes on Iran.

Both crude benchmarks had settled at their highest in over two weeks after U.S. President Donald Trump threatened fresh strikes against Iran as soon as Wednesday night. Trump also said that an interim deal to end the Iran war was "over", but then ruled out full-fledged war.

Brent crude futures last traded up at $79.28 a barrel, after settling up more than 5 per cent at $78.02 to end Wednesday's session. U.S. West Texas Intermediate crude futures were trading at $74.76 a barrel, up from the session's settlement level of $73.52.

The U.S. military's Central Command announced on Wednesday it was launching fresh strikes on Iran aimed at keeping the Strait of Hormuz open to traffic.

Ongoing U.S. strikes against Iran are expected to be bigger than attacks carried out on Tuesday, a U.S. official told Reuters. Explosions were reported by Iranian media in Bandar Abbas, Abu Musa, Bushehr, and other parts of the country.

The latest strikes follow a flare-up in tensions triggered by Iranian attacks on ships in the Strait of Hormuz, following which the U.S. revoked sanctions relief for Iranian oil sales that were agreed in the interim deal between the two sides last month. Iran on Wednesday said it had struck U.S. military sites in Bahrain and Kuwait, triggering U.S. retaliatory strikes.

A fifth of global oil supplies traversed the strait prior to the Iran war, and Tehran's control of the waterway has been its main leverage in a conflict that started with U.S. and Israeli airstrikes against Iran on February 28.

Maritime authorities raised the threat risk for vessels transiting the strait to "severe" after attacks on two tankers on Tuesday.

Source: Reuters
--Agencies