Oil Prices Rise as US-Iran Conflict Escalates
Oil prices moved higher on Thursday after the United States carried out fresh military strikes against Iran and Tehran responded by announcing the closure of the Strait of Hormuz to all maritime traffic.
Brent crude futures for August delivery gained 0.8% to $93.88 per barrel, while U.S. West Texas Intermediate (WTI) crude futures climbed 1% to $90.92 per barrel. Earlier in the Asian trading session, both benchmarks had surged more than 2% before giving back part of their gains.
The latest advance follows a nearly 2% increase in oil prices during the previous trading session, as investors continued to assess the potential impact of growing geopolitical risks on global energy supplies.
Strait of Hormuz Closure Raises Supply Concerns
Tensions in the Middle East intensified after U.S. President Donald Trump warned that Washington would respond forcefully if diplomatic efforts with Iran failed. Overnight, U.S. forces reportedly conducted another round of strikes against Iranian targets.
In response, Iran announced counterattacks on U.S. military facilities in Kuwait and Bahrain. Shortly afterward, Iranian military officials declared the Strait of Hormuz closed to all vessel traffic, including oil tankers and commercial ships.
Iran also warned that any vessel attempting to pass through the strategic waterway could become a target.
The Strait of Hormuz remains one of the world’s most critical energy chokepoints, handling a significant portion of global seaborne crude oil exports. Any prolonged disruption could have major implications for global energy markets and supply chains.
Energy Markets React to Rising Geopolitical Risk
The latest military developments came just one day after the United States launched strikes on Iranian targets following the reported downing of a U.S. Army Apache helicopter near the Strait of Hormuz.
Analysts at ING noted that the escalating conflict suggests a diplomatic resolution remains unlikely in the near term, increasing the risk of continued disruptions to energy flows from the Persian Gulf.
Adding another layer to the situation, President Trump revealed that the U.S. military had been quietly assisting with the protection of oil shipments moving through the Strait of Hormuz. According to Trump, more than 100 million barrels of oil have already passed through the route under U.S. protection.
Sharp Decline in US Oil Inventories Supports Prices
Oil prices also received support from a larger-than-expected drawdown in U.S. crude stockpiles.
Data released by the U.S. Energy Information Administration showed that crude inventories fell by 7.2 million barrels during the week ending June 5, significantly exceeding market expectations for a decline of around 3 million barrels.
Meanwhile, gasoline inventories increased by 0.2 million barrels, while distillate fuel stockpiles, including diesel and heating oil, declined by 0.2 million barrels.
Inflation and Fed Outlook Remain in Focus
Investors are also closely monitoring the inflationary impact of higher energy prices. Recent data showed that U.S. consumer inflation accelerated to 4.2% in May, reinforcing expectations that central banks may maintain higher interest rates for longer than previously anticipated.
Market participants are now awaiting U.S. producer price data and weekly jobless claims figures for additional insight into inflation trends and the potential path of future Federal Reserve policy decisions.
