Brent jumps 7.5% to $88 as Iran attacks revive supply fears
A sudden escalation of hostilities between the US and Iran has driven crude prices sharply higher, reminding markets that structural threats to critical Middle Eastern shipping lanes remain unresolved.
Crude oil prices surged on Wednesday after Iran launched overnight attacks on US forces across the Middle East, prompting a sharp military and rhetorical response from Washington. Brent crude climbed 7.5% to $88.13 a barrel, while US benchmark WTI rose 6.3% to $85.53.
US President Donald Trump warned that Iran was "going to get a beating" during a Fox News interview, describing Tehran-backed militias as "a cancer on the world." The US and Saudi Arabia responded to the overnight provocations by striking Iran-backed groups in Iraq, a move Trump noted was coordinated with Baghdad.
The sudden price jump reverses a days-long lull and forces traders to rebuild the geopolitical risk premium into oil. It exposes the fragility of a recent diplomatic thaw that followed 13 days of intense hostilities. That brief calm had allowed Iranian crude exports to resume and tanker traffic to normalize after an interim agreement was signed in June, only for fighting to resume this month over the status of the Strait of Hormuz.
At the center of the supply anxiety is the Strait of Hormuz, a conduit for nearly 20% of global seaborne oil. Diplomatic efforts to resolve the standoff have foundered on Tehran's refusal to accept Oman's proposal for a 50-50 joint management of the waterway. Iran is instead insisting on retaining full control over inbound shipping and a share of the outbound route.
Risks are also compounding at a second critical chokepoint. Yemen's Houthi rebels, who recently declared a naval blockade on Saudi Arabia and attacked two Saudi oil tankers, are considering imposing transit fees on commercial ships passing through the Bab el-Mandeb Strait. For Asian markets, a disruption here would be severe, forcing cargoes on a 50-day detour around southern Africa instead of the standard 16-day route through the Red Sea.
Despite the escalation, Trump reiterated that diplomatic talks with Tehran would continue, marking his second major warning to Iran this week. However, the failure to secure a lasting ceasefire since the conflict began on 28 February suggests that oil markets will remain hypersensitive to any shifts in Middle Eastern shipping security.
