Crude oil surged Wednesday morning with prices rising almost two dollars a barrel as a result of tension surrounding Iran.

Late Tuesday, crude prices surged above 68 dollars a barrel amid rumors that Iran had fired a missile at a U.S. ship in the Persian Gulf.

The U.S. military denied the reports, saying all ships in the Gulf had been checked and the rumors were untrue.

Still, the rumors spurred panic buying in the trading.

Light sweet crude for May delivery rose 1.99 dollars to 64.92 dollars a barrel on the New York Mercantile Exchange.

The Brent crude contract for May delivery rose 1.39 dollars to 65.99 dollars a barrel on the ICE Futures exchange in London.

The United States Tuesday launched a military training operation in the Persian Gulf involving two aircraft carrier fighting groups, the largest show of U.S. force in the Gulf since the 2003 invasion of Iraq.