Oil prices rose on Thursday as renewed U.S. military action in Iran unsettled investors and revived concerns that shipping through the Strait of Hormuz could be disrupted if tensions in the Gulf intensify.
Brent crude, the international benchmark, climbed to around $96 a barrel, while West Texas Intermediate moved above $90. The gains came as traders reassessed the risk of supply interruptions in one of the world’s most sensitive energy corridors, where even limited military activity can quickly influence global prices.
The latest move followed reports that American forces had struck an Iranian military site believed to pose a threat to U.S. troops and commercial vessels operating near the Strait of Hormuz. U.S. forces also reportedly intercepted and destroyed several Iranian drones, adding to fears that the already fragile security situation could deteriorate further.
The Strait of Hormuz is a crucial route for oil and petroleum shipments from major Gulf producers to international markets. A sustained disruption there could affect supplies to Asia, Europe, and other regions, while also raising freight costs and putting additional pressure on fuel prices.
Oil markets had previously shown signs of easing after reports suggested Washington and Tehran were moving closer to a possible agreement. That had encouraged some investors to scale back expectations of a worst-case supply shock. However, the latest strikes have made the outlook less certain and reinforced the view that geopolitical risk remains a major driver of energy prices.
In a note issued late Wednesday, Citi said crude markets had been finding firmer support as investors reduced the premium attached to the most severe disruption scenarios. The bank said signs of possible progress between the U.S. and Iran had helped calm some fears, although uncertainty over the timing of any deal continued to weigh on sentiment.
Citi also warned that the recent rise in crude prices was beginning to feed into wider inflation risks, particularly through “second round effects,” as higher energy costs move through transport, production, and consumer prices.
That could leave central banks with less room to ease policy, especially if energy-driven inflation proves persistent.