Oil prices jumped more than 3 percent on Thursday after Iran’s Revolutionary Guards said they had targeted a U.S. airbase following fresh American military strikes, reigniting fears of supply disruptions in the Middle East and threatening key global energy routes.
Brent crude, the international benchmark, rose more than three percent to US$97.29 a barrel, while U.S. West Texas Intermediate (WTI) climbed 3.42 percent to US$91.71 a barrel as investors reacted to the latest escalation between Washington and Tehran.
The gains came after Iran’s Islamic Revolutionary Guard Corps (IRGC) announced that it had launched an attack on a U.S. airbase at around 4:50 a.m. local time, according to Iran’s semi-official Tasnim news agency. The statement did not specify the location of the base or provide details on the extent of any damage.
The reported attack followed fresh U.S. strikes on a military facility inside Iran that American officials said posed a threat to U.S. forces and commercial shipping operating in and around the strategically vital Strait of Hormuz.
A U.S. official, quoted by American media, said the operation targeted military infrastructure believed to be linked to threats against international maritime traffic. U.S. forces also reportedly intercepted and destroyed several Iranian drones during the operation.
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The developments heightened concerns about the security of the Strait of Hormuz, a narrow waterway through which roughly one-fifth of the world’s oil supply passes. Any disruption to shipping through the route could have major consequences for global energy markets and inflation.
Traders responded swiftly to the renewed uncertainty, driving oil prices sharply higher after weeks of volatile trading influenced by geopolitical risks and supply concerns.
Market analysts said investors were increasingly focused on the potential for broader conflict in the region, particularly if retaliatory actions continue between the United States and Iran.
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“The market remains highly sensitive to developments involving the Strait of Hormuz,” said one energy analyst. “Even the perception of increased risk to shipping routes is enough to trigger significant price movements.”
Despite the latest spike, some analysts noted that oil markets had recently shown signs of stabilizing as expectations grew that Washington and Tehran could eventually return to negotiations aimed at reducing tensions.
In a note issued late Wednesday, analysts at Citigroup said oil markets had been finding firmer footing as traders gradually discounted the likelihood of severe supply disruptions. The bank pointed to indications that diplomatic efforts between the two countries were still ongoing, helping to temper some of the more extreme market fears.
However, Citi warned that uncertainty surrounding the timing and prospects of any agreement continued to weigh heavily on markets.
The bank also cautioned that sustained increases in crude oil prices were beginning to feed into broader inflationary pressures worldwide.
According to the analysts, rising energy costs were generating what economists refer to as “second-round effects,” where higher fuel prices contribute to increased costs across sectors ranging from transportation to manufacturing and consumer goods.
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Those pressures could complicate efforts by central banks to control inflation, particularly in economies already grappling with elevated price growth.
As a result, policymakers may be forced to maintain tighter monetary policies for longer than previously anticipated, Citi said.
The renewed surge in oil prices comes at a time when global markets are closely monitoring geopolitical developments across the Middle East, where any escalation involving major oil-producing nations has the potential to affect energy supplies, inflation trends and economic growth worldwide.
Investors are expected to remain focused on further military and diplomatic developments in the coming days as they assess the likelihood of additional disruptions to global oil flows and regional stability.
