Oil prices increased by more than one percent on Thursday after the United States launched a new series of military strikes against Iran. This escalation has severely damaged prospects for ending the conflict and jeopardized the complete reopening of the strategically vital Strait of Hormuz, a key maritime passage that previously handled about 20% of the world’s oil supply before the war.
International benchmark Brent crude futures rose by 86 cents, or 1.1%, closing at $78.88 per barrel. Simultaneously, US West Texas Intermediate (WTI) crude futures climbed 85 cents, or 1.2%, to settle at $74.37 per barrel. Both benchmarks had already seen a sharp increase late Wednesday following the commencement of the US aerial campaign, which came after warnings issued by President Donald Trump.
In a significant development, this escalation shattered the fragile ceasefire that had been in place. Analysts from ING highlighted that the renewed hostilities have deeply undermined confidence in the already delicate truce, pushing geopolitical risk premiums back into the spotlight for energy markets.
The US Central Command reported that American forces targeted around 90 Iranian military sites along the coastline. The strikes focused on air defense systems, coastal surveillance equipment, missile and drone storage facilities, as well as naval infrastructure. Washington stated that the operation aimed to ensure the Strait of Hormuz remains open for international shipping.
This military action followed President Trump’s declaration that an interim peace agreement to end the war was over. In retaliation to earlier escalations, Tehran had launched strikes against US military bases in Bahrain and Kuwait.
Meanwhile, the renewed conflict has immediately impacted maritime logistics in the region. Analysts noted that the recent increase in oil shipments through the strait has effectively stopped, as shipowners and insurers adopt a more cautious approach amid the threat of intensified hostilities.
Iran’s strategic leverage in the conflict largely depends on its ability to disrupt traffic through this narrow waterway, which has been a major flashpoint since the war began with US and Israeli airstrikes on February 28.
Energy experts anticipate sustained price volatility in the near future. DBS Bank analysts pointed out that Iran has strong incentives to prolong diplomatic negotiations, meaning the war risk premium embedded in oil prices is unlikely to fade soon.
Although medium-term crude price trends may decline due to broader macroeconomic factors, ongoing uncertainty in the Middle East is expected to keep global energy markets highly volatile for several months ahead.
