Oil surges 3% as US-Iran strikes revive Hormuz supply fears

Oil markets reacted sharply Thursday to reports of renewed American military action inside Iran, with Brent crude climbing nearly 3 percent to $97.16 a barrel and West Texas Intermediate futures advancing to $91.43. The moves followed U.S. strikes on an Iranian military site that American officials described as a threat to troops and to commercial shipping through the Strait of Hormuz. Iran’s Revolutionary Guards responded by announcing they had targeted a U.S. airbase, though they provided no further details on location or damage.

The price increase reversed a decline recorded the previous session, when comments from Secretary of State Marco Rubio about diplomatic progress had eased some supply concerns. Rubio told reporters that talks with Tehran had advanced and that the administration preferred a negotiated path. President Trump, however, stated that any agreement would not permit Iran to maintain control over the Strait of Hormuz. Iranian state media had earlier indicated that Tehran would restore normal commercial traffic through the waterway within a month of reaching an accord.

Analysts at Citi noted that markets appeared to be moving away from worst-case disruption scenarios even as uncertainty about the timing of any deal kept central banks attentive to energy-driven inflation risks. The bank observed that the earlier climb in crude prices was already feeding into broader price pressures through secondary effects, a development that could influence monetary policy decisions in coming months.

Equity futures pointed to a cautious open on Wall Street. S&P 500 contracts slipped 0.2 percent and Nasdaq 100 futures fell about 0.3 percent, with traders citing both the rebound in energy costs and the upcoming release of fresh inflation data. The Dow Jones Industrial Average futures also traded lower after the blue-chip index posted a record close on Wednesday when oil prices had retreated.

The Strait of Hormuz remains central to the current standoff. Roughly one-fifth of global oil consumption passes through the narrow waterway, making any sustained interruption a direct concern for refiners, shipping companies, and central banks monitoring inflation. U.S. officials said American forces had intercepted several Iranian drones during the latest round of strikes, underscoring the continued risk of escalation even as both sides signal interest in talks.

Market participants now face two overlapping calendars. One tracks diplomatic meetings that could determine whether sanctions relief or further military action lies ahead. The other follows inflation releases that will show how much of the recent energy-price increase has passed through to consumers and businesses. Citi warned that prolonged elevation in crude costs could prompt additional central-bank caution, particularly if wage and price-setting behavior begins to adjust upward.

For now, the immediate price signal is clear: geopolitical friction in the Persian Gulf continues to set the floor for energy markets, even as negotiators search for an off-ramp. How long that floor holds will depend on whether the latest strikes produce a cycle of retaliation or accelerate the diplomatic contacts both governments have publicly endorsed.