Oil prices increased significantly after renewed confrontations between U.S. and Iranian military forces, casting doubt on the prospects of an agreement to end the ten-week-long conflict.
Following a volatile trading session on Thursday, West Texas Intermediate crude rose by as much as 4%, approaching $99 per barrel, while Brent crude closed near $100 per barrel. U.S. Central Command stated that while a naval missile destroyer transited the Strait of Hormuz en route to the Gulf of Oman, U.S. forces intercepted an unprovoked Iranian attack and carried out a defensive strike. However, the military command added that it “does not seek escalation.”
According to a social media post, U.S. President Donald Trump stated that the three U.S. warships successfully and unharmed exited the Strait of Hormuz. Regarding Iran, he added, “If they do not sign an agreement soon, they will be hit harder and more forcefully in the future!”
Global oil market attention remains focused on the strait, which has been effectively blocked since late February. This has triggered an unprecedented energy supply shock, with key crude shipments disrupted and oil wells shut down across the region. The waterway is facing a dual blockade: Tehran is impeding vessel transit, while the U.S. is preventing ships from docking at or departing from Iranian ports.
Dennis Kissler, Senior Vice President of Trading at BOK Financial Securities Inc., noted that until shipping volume through the passage recovers to a significant portion of its former level, “downside risk for crude prices will remain limited.”
As the U.S. attempts to exit a war that is increasingly burdening consumers—with retail gasoline and diesel prices soaring—recent clashes have heightened tensions across the region. This week, the Trump administration has been awaiting Tehran’s response to its proposal to reopen the strait, though Iranian leaders have yet to indicate whether they will accept the terms.
As hostilities continue, liquidity in the oil market has sharply declined, with traders increasingly hesitant to establish positions amid a flurry of headlines and rapidly shifting sentiment that have heightened volatility. This has further amplified price swings in both Brent and WTI crude.
The head of the International Energy Agency warned that the conflict is causing a global loss of 14 million barrels of oil per day, and that restoring production after the conflict ends will be a gradual process. Fatih Birol, during a visit to Canada on Thursday, also reaffirmed that the Paris-based IEA is prepared to take further action, following its member nations' agreement in March to release 400 million barrels of oil.
In a podcast interview, Bridgewater founder Ray Dalio stated that the outcome of the U.S.-Iran conflict could be “defined almost in black-and-white terms as who will control the Strait of Hormuz.”
