Brent tops $86 as US-Iran strikes threaten Hormuz oil flows
Crude prices surged to a one-month high after the US launched fresh strikes on Iran and reinstated a shipping blockade at the Strait of Hormuz, reviving supply risk premiums for global energy markets.
Brent crude rose $1.46, or 1.72%, to settle at $86.19 a barrel on Wednesday, its highest close since June 12. West Texas Intermediate reached its strongest close since June 15 before advancing further in early trading, gaining $1.11, or 1.4%, to $80.40. The moves extended a three-session rally driven by a rapid military escalation between Washington and Tehran.
The US reinstated its blockade of Iranian shipping through the Strait of Hormuz at 4 p.m. Washington time. This followed fresh American strikes on Iranian targets an hour earlier, conducted to degrade the country's ability to attack commercial vessels in the strategic waterway.
The military campaign shows no immediate signs of de-escalation. US President Donald Trump told Fox News that strikes would continue, warning that power plants and bridges could be targeted next week unless Iran returns to the negotiating table. The collapse of a previous ceasefire has already disrupted regional shipping, including attacks on oil tankers and Kuwait.
Despite the aggressive posture, Trump reversed an earlier proposal to impose a 20% fee on cargo passing through the Strait. The decision to abandon the transit levy offered a measure of relief to the shipping sector, which had been bracing for compounded financial costs alongside physical security risks.
Wider regional risks
For markets, the conflict marks a sharp reversal from the second quarter, when prices fell nearly 30% and Persian Gulf producers like the UAE had boosted exports using shuttle tankers with transponders switched off. That interim peace agreement has now clearly unraveled.
The Strait of Hormuz handles roughly one-fifth of global crude and liquefied natural gas trade, making any sustained threat to its passage a major macroeconomic risk. Compounding these supply fears, Yemen's Iran-backed Houthi rebels fired ballistic missiles and drones toward Saudi Arabia in the most significant escalation since a 2022 ceasefire.
The convergence of direct US-Iran hostilities and renewed proxy attacks across the Gulf has erased the supply comfort of recent weeks. Investors and executives must now price in a prolonged period of elevated geopolitical risk and the potential for physical energy shortages.
