Oil prices surged more than 3.72% on Thursday following Iran's retaliatory strikes against US military targets. Brent crude futures rose $3.51 to $97.8 a barrel, while US West Texas Intermediate futures climbed $3.31 to $91.99. The more active August contract gained $3.35 or 3.63% to $95.6, as reported by Reuters. This represents a significant increase from the previous session's 2% surge, as both benchmarks had slipped more than 5% to touch their lowest in a month in the previous session on the possibility of a US-Iran deal to end their war and reopen the Strait of Hormuz. The July contract is set to expire on Friday, adding to the market volatility as traders navigate the uncertain geopolitical landscape.
Iran's Revolutionary Guards announced they targeted a US airbase after what they described as an early morning US attack near Bandar Abbas airport, according to the country's semi-official Tasnim news agency. Iran's Revolutionary Guards warned that any repeat of what they called aggression would draw a "more decisive" response, as reported by Reuters. The US military launched new strikes in Iran targeting a military site that officials believed posed a threat to US forces and commercial maritime traffic in the strait. US officials said Central Command forces shot down four Iranian one-way attack drones that posed a threat near the Strait of Hormuz, while the US military also struck an Iranian ground control station in Bandar Abbas that was preparing to launch a fifth drone. The Islamic Revolutionary Guard Corps later said it would respond to ceasefire violations after detecting and engaging US drones and an F-35 fighter jet that had entered Iranian airspace.
Iran has successfully resumed gas production at three offshore platforms within the massive South Pars gas field following recent Israeli air strikes. Touraj Dehqani, CEO of Pars Oil and Gas Company, said that the offshore extraction platforms themselves sustained no physical damage during the attacks, according to state media reports. To circumvent the damaged infrastructure and restore output, Dehqani explained that production from the three offshore platforms is currently being rerouted to alternative processing plants operating in the region. This temporary diversion allows operations to continue while engineering teams conduct extensive repairs at the impacted onshore sites, which include the prominent Phase 14 refinery. The restoration demonstrates Iran's ability to maintain energy production despite ongoing military tensions.
Iran's lead negotiator cautioned that the United States remains an unreliable partner, stressing that Tehran would only consider an agreement with Washington if Iranian rights were fully guaranteed. The comments by Mohammad Bagher Ghalibaf came amid reports that US President Donald Trump had returned a revised and more stringent peace proposal to Iran. According to reports published by The New York Times and Axios, Trump submitted a tougher negotiating framework for Tehran's consideration, although the precise details of the proposal have not been made public. Iran has consistently maintained that its nuclear activities are intended solely for civilian purposes, while the United States and its Western allies have long expressed concerns about potential weapons development capabilities.
The sustained rise in crude prices is beginning to feed into broader inflation pressures through what analysts describe as "second round effects," pushing some central banks toward a more hawkish stance, according to Citi. Saudi Aramco CEO Amin Nasser warned that disruptions in Hormuz could delay stability in global oil markets until 2027, with nearly 100 million barrels of oil supply per week potentially impacted. Morgan Stanley described the current oil market as being "in a race against time," saying the factors that have so far prevented a sharper rise in crude prices may weaken if the Strait of Hormuz remains shut through June. Analysts warn that even if a deal is reached, shipping activity through the strait may take several months to normalize, while damaged energy infrastructure could take even longer to recover fully.
