Oil surges past 2% as U.S.-Iran air strikes shatter peace hopes
Oil prices jumped more than 2% on Thursday morning after Iran’s Islamic Revolutionary Guard Corps targeted a U.S. military installation, swiftly reversing a sharp sell-off from the previous session that had been fueled by optimism over a potential diplomatic resolution to the conflict.
Global benchmark Brent crude futures advanced $2.34, or 2.48%, to $96.63 a barrel, while the more active August contract gained $2.24, or 2.43%, to trade at $94.49.
The July Brent contract is scheduled to expire on Friday.
Concurrently, U.S. West Texas Intermediate futures climbed $2.26, or 2.55%, to reach $90.94 a barrel.
The market pivot follows a statement from the Islamic Revolutionary Guard Corps confirming it launched a retaliatory strike against a U.S. airbase.
The Iranian military unit stated the action was a direct response to an early morning U.S. aerial bombardment near the Bandar Abbas airport in southern Iran.
Carried out via the state-run Tasnim news agency, the declaration warned that any further external aggression would prompt a more decisive military response.
A U.S. official confirmed that the American military had launched defensive strikes in Iran earlier in the day.
According to the official, U.S. forces targeted a specific military site in Bandar Abbas believed to pose an immediate threat to American personnel and international commercial maritime shipping traffic navigating the critical Strait of Hormuz checkpoint.
The escalation abruptly ended a broad market correction.
In the prior trading session, both oil benchmarks had tumbled more than 5% to hit one-month lows on reports that the United States and Iran were making progress through Pakistani-mediated talks to establish a ceasefire, end the months-long war, and formally reopen the Strait of Hormuz to global energy flows.
Market analysts indicated that the latest military friction underscores the fragile landscape of current energy supply chains.
The persistent threat of micro-skirmishes suggests that despite diplomatic overtures, a structural resolution remains distant, leaving the Strait of Hormuz—which carries roughly 20% of global oil transportation—effectively closed to normal traffic.
Beyond the immediate geopolitical risk premium, underlying energy fundamentals provided additional floor support for prices.
Domestic supply remains constrained, with the American Petroleum Institute reporting that U.S. crude oil stockpiles fell by 2.8 million barrels last week, marking the sixth consecutive week of commercial inventory declines.