Oil prices jumped more than 3% on Thursday after Iran's Revolutionary Guards said they targeted a U.S. airbase in response to a U.S. attack near Bandar Abbas airport, according to Reuters. Brent crude futures rose $3.51, or 3.72%, to $97.8 a barrel by 0344 GMT, while the more active August contract gained $3.35 or 3.63%, to $95.6. West Texas Intermediate futures were up $3.31, or 3.73%, at $91.99, as reported by Reuters. The U.S. military launched new strikes in Iran targeting a military site that officials believed posed a threat to U.S. forces and commercial maritime traffic in the strait, a U.S. official told Reuters. The strikes included US forces shooting down drones fired at a commercial ship and striking a launching unit, highlighting the ongoing military tensions. Iran's Revolutionary Guards warned that any repeat of what they called aggression would draw a 'more decisive' response, with the conflict that's gripped global financial markets now entering its fourth month after erupting at the end of February.
President Donald Trump said he was 'not satisfied' with talks on Hormuz, as the White House denied an Iranian report on a draft agreement that said Tehran and Oman would oversee the waterway. As reported by The Business Times, Trump stated 'The strait's going to be open to everybody,' adding that the US will 'watch over it.' The president also indicated he wouldn't agree to a bad deal and insisted the US would not ease sanctions, which is at odds with Tehran's demand for an end to attacks and financial relief. Trump faces pressure from Republican hardliners to continue the war, adding complexity to the ongoing negotiations. The US Treasury sanctioned the Persian Gulf Strait Authority, stating the entity 'spearheads an Iranian-controlled scheme that flagrantly violates international law,' highlighting Tehran's push to collect tolls from vessels transiting the strait.
The Iran war has created a crisis in US liquefied petroleum gas (LPG) exports as buyers scramble to secure alternative supplies. At least two cargoes scheduled to load next month from export terminals on the US Gulf Coast were canceled, with some buyers in talks to terminate more shipments, according to people familiar with the matter. Asian LPG buyers were forced to scramble for more US supplies after the Iran war led to the near-closure of the Strait of Hormuz, choking off flows from the Persian Gulf. A key marker for gauging profits from exporting US gas to East Asia, known as the Far East Index-Mont Belvieu differential, has narrowed while shipping rates have jumped, wiping out healthy returns for traders. India, a major importer that shipped 90% of its LPG from the Middle East prior to the war, turned to the US to partially replace lost supply, but inflated shipping rates have driven up costs and squeezed the nation's state refiners.
The conflict has now expanded beyond Iran, with Kuwait's military reporting that air defences are battling 'hostile' missiles and drones, as alarms sound across the country, according to latest reports. This represents a significant escalation from the initial Iran-focused military operations. The U.S. military has carried out new strikes on an Iranian military site allegedly posing a threat to US forces and maritime traffic in the Strait of Hormuz, with Iranian media reporting that US forces struck near the Bandar Abbas port, causing no damage or casualties. The expanded targeting suggests a broader U.S. military response to perceived threats across the region, potentially intensifying the conflict's impact on global energy markets.
Despite the military escalation, crude is still on pace for a second weekly drop following optimism that warring parties will manage to conclude at least an interim deal, according to The Business Times reports. Oil supply remains constrained, and key sticking points have yet to be resolved, as noted by ANZ commodity strategist Daniel Hynes. The conflict has choked off energy flows, with millions of barrels of daily oil supply shut-in across the region. In the US, crude oil stockpiles fell by 2.8 million barrels last week, marking the sixth straight week of declines, according to American Petroleum Institute data reported by Reuters. As noted by Joe DeLaura, global energy strategist at Rabobank, the oil market is very complacent right now, with releases from strategic petroleum reserves and sharply lower imports by China helping to cushion supply losses caused by the war.
