Prospects for a de-escalation in tensions faded after the US launched a large-scale airstrike against Iran on Wednesday evening, retaliating for a missile attack on American forces in the Middle East. International oil prices rose sharply on Thursday in response.
Iran's Islamic Revolutionary Guard Corps has stated it will take countermeasures, raising the risk of further conflict escalation. Brent crude futures, the international benchmark, rose 1.5% to $92.10 per barrel, while US West Texas Intermediate (WTI) crude futures climbed 0.9% to settle at $85.23 per barrel.
The geopolitical landscape has shifted once again following the airstrike. Since the conflict erupted in late February, the situation has seesawed, causing severe volatility in oil prices and persistent disruptions to shipping through the Strait of Hormuz.
Last weekend, the US paused two weeks of strikes against Iranian targets, creating room for diplomatic negotiations. However, just hours earlier, Donald Trump signaled a strong retaliation against Iran. In a Wednesday morning interview with Fox News, Trump stated, "We will come out with a heavy punch. Iran will suffer a severe blow."
The US Central Command stated that the military operation was a forceful response to the Iranian missile attack on American forces in the Middle East on Tuesday. The two-hour airstrike targeted dozens of sites linked to Iran's Revolutionary Guard within the country, including military command centers, missile and drone facilities, coastal surveillance and defense positions, and naval-related equipment and installations.
Traders are now closely monitoring the upcoming OPEC+ meeting scheduled for Sunday. The market widely expects the oil alliance to announce an increase in daily production of 188,000 barrels for September. Strategists at ING wrote in a research note on Wednesday, "The biggest variable for the entire year of 2027 remains the policy direction of OPEC+. Member states have the potential to resist production quotas and exceed output limits."
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