Oil prices extended gains on Thursday as new U.S. strikes on Iranian positions heightened worries about supply disruptions from the Middle East. Market participants reacted to the prospect that renewed confrontation could once again imperil transit through the Strait of Hormuz and undermine the fragile restart in Gulf crude exports.
By 21:47 ET (01:47 GMT), Crude Oil WTI Futures were up 1.12% at $74.34 a barrel, while Brent Oil Futures climbed 1.12% to $78.89 a barrel. Prices remained clearly elevated even after trimming some gains; both benchmarks had jumped by more than 8% in the prior session after a series of moves that raised the risk premium on Middle East supplies.
What triggered the move
Markets reacted to a recent escalation in hostilities. In the previous session, President Donald Trump declared the U.S.-Iran ceasefire effectively over, ordered fresh strikes on Iranian targets and warned of further military action. Tehran responded by threatening to close the Strait of Hormuz. That sequence of events prompted a sharp initial move higher in crude prices and left traders on edge.
Concerns were amplified by a string of attacks on commercial vessels near the Strait of Hormuz over the past two days. Reports said a Qatari LNG tanker, a Saudi crude tanker and at least one other commercial vessel were struck in separate incidents. In a related incident, another tanker off the coast of Oman reported being hit by an unidentified projectile; the vessel caught fire but there were no casualties reported. Those attacks prompted several oil and gas tankers to delay or reverse planned transits as operators reassessed security risks.
Official advisories and military responses
The U.S.-led Joint Maritime Information Center upgraded the threat level for shipping in the Strait of Hormuz to "severe," and the International Maritime Organization urged ships to exercise extreme caution when transiting the route. Against that backdrop, Washington said it had launched fresh strikes on Iranian targets aimed at degrading Tehran's ability to threaten commercial shipping. Iran, in turn, warned it would retaliate against U.S. military assets and reiterated threats regarding navigation through the Strait.
Implications for Gulf exports
The renewed confrontation has cast doubt on the recovery in Persian Gulf oil exports. Tanker traffic through the Strait had been gradually improving following last month's ceasefire, but traders are now concerned that further attacks on commercial vessels could stall or reverse that improvement and once again threaten crude flows from the region.
Analysts and market participants are closely watching whether the interim agreement between the U.S. and Iran will hold. ANZ noted that the latest developments have revived fears that the collapse of that agreement could disrupt Persian Gulf oil supplies. The bank also pointed to increased tightness elsewhere in fuel markets as a factor supporting prices.
Downstream supply indicators
ANZ highlighted growing firmness in refined fuel markets after Russia extended restrictions on diesel exports through July. U.S. government data cited in market commentary showed another sizeable draw in distillate and gasoline inventories alongside record fuel exports. Those dynamics, together with the release of additional barrels from the Strategic Petroleum Reserve and tightening fuel inventories, were cited as evidence of persistent strength in downstream demand even as commercial crude stockpiles saw an increase last week.
What markets will watch next
For now, markets are focused on several near-term variables: how the U.S.-Iran situation unfolds, whether shipping conditions in the Strait of Hormuz deteriorate further, and whether additional disruptions to Middle East crude exports occur. Any of those developments could add to the geopolitical premium in oil prices and influence both upstream and downstream market balance.
Investors and energy market participants remain attentive to official advisories, tanker movements, inventory releases and further statements from Washington and Tehran as they reassess risk and supply outlooks.