Oil rebounds on Iran strikes as markets eye PCE inflation data

Fresh American military strikes inside Iran have sent oil prices climbing sharply higher and raised fresh alarms about potential disruptions to vital shipping lanes in the Strait of Hormuz. Brent crude futures surged nearly 3 percent to around 97 dollars a barrel while West Texas Intermediate gained similar ground above 91 dollars, reflecting market worries that the latest round of U.S. action could further destabilize an already fragile situation.

Iranian state media reported that Revolutionary Guard forces targeted a U.S. airbase in retaliation shortly after the American strikes, which officials described as aimed at sites threatening both U.S. troops and commercial traffic through the narrow waterway. The developments come even as the Trump administration has publicly stated a preference for negotiated diplomacy with Tehran, with Secretary of State Marco Rubio noting some progress in talks. President Trump has nonetheless made clear that any agreement must prevent Iran from exercising control over the Strait of Hormuz, a position that appears to have complicated efforts to restore pre-conflict shipping levels within the one-month timeline Iranian officials had floated.

The price spike is adding to broader inflationary pressures that policymakers had hoped would prove temporary. Chicago Federal Reserve President Austan Goolsbee told CNBC that energy costs tied to the conflict have persisted longer than initial futures markets anticipated, creating what he called a stagflationary shock for Asian economies that rely heavily on imported oil. Prices remain well above the levels seen before U.S. and Israeli strikes began, with Brent trading near 96 dollars compared with roughly 72 dollars prior to the escalation. Goolsbee, who dissented against the Fed’s final rate cut last year over concerns about stubborn inflation, said he sees no reason to regret that stance given how energy-driven price increases have fed into wider costs.

Equity markets reflected the unease, with S&P 500 futures slipping 0.2 percent in early trading and Nasdaq 100 futures down 0.3 percent. Traders are now focused on an upcoming inflation reading that could influence expectations for interest-rate policy amid the energy volatility. Analysts at Citi noted that while some worst-case supply disruption scenarios appear to be priced out as talks continue, uncertainty over the timing of any deal is keeping central banks cautious about the risk of second-round inflation effects.

The back-and-forth military moves underscore how quickly diplomatic openings can be overshadowed by battlefield developments. For energy-importing nations across Asia and beyond, the sustained elevation in crude prices threatens to squeeze growth while keeping inflation elevated, a combination that could force difficult policy trade-offs. Markets will be watching closely to see whether the latest strikes accelerate or derail the negotiations both sides have said they still hope to advance.