Brent hits $88 as US-Iran strikes threaten Gulf oil exports
Oil prices surged to their highest levels since June after direct military strikes between the US and Iran raised the threat of a complete halt to tanker traffic through the Persian Gulf.
Brent crude jumped $3.87, or 4.59%, to settle at $88.10 a barrel. U.S. West Texas Intermediate futures gained $3.54, or 4.48%, to reach $82.49. Both benchmarks marked their highest closes since mid-June.
The session's gains pushed both benchmarks up roughly 16% for the week. Brent notched its third consecutive weekly advance, while WTI posted its second straight weekly gain.
The sharp rally followed a major escalation in hostilities between Washington and Tehran. The U.S. targeted an airport and bridges in Iran, while Iran struck a power and desalination plant in Kuwait.
Iran claimed it also hit U.S. facilities across the Middle East, including what it said was the first direct attack on American positions in Syria. These Iranian strikes followed a sixth consecutive night of U.S. bombardments on Iranian military infrastructure.
The escalating conflict is driving the market's aggressive repricing of supply risk. "The market is reacting to the increasing hostilities between Iran and the United States that have culminated this week with nightly attacks on Iranian infrastructure and retaliation by Iran on its neighbors' infrastructure," said Andrew Lipow, president of Lipow Oil Associates.
The immediate market concern is the physical flow of crude out of the region. "If more tankers come under fire and become damaged, we're going to see oil prices continue to move up as shipowners simply refuse to enter the Persian Gulf," Lipow warned.
The violence is already spilling into neighboring states, underpinning the shipping fears. Qatar's defence ministry reported intercepting an Iranian missile attack early on Friday, with the interior ministry noting a child was wounded by shrapnel from the interception.
Supply anxieties are not limited to the Gulf. Ukraine's military said it struck a Russian oil refinery in the Yaroslavl region on Thursday, adding another layer of uncertainty to global crude availability.
For investors, the convergence of these conflicts translates into a structural shift in energy pricing. Traders are now forced to factor in the possibility of sustained disruptions to Persian Gulf crude flows, a scenario that would severely strain global energy inventories and push costs higher across the broader economy.
