Oil Prices Surge as U.S., Iran Exchange Strikes on Tankers in Persian Gulf

Oil prices climbed in early Thursday trading, building on recent highs as an escalating military conflict between the United States and Iran stoked fears of significant energy supply disruptions from the Middle East.

West Texas Intermediate (WTI) crude futures rose 1.1% to $97.14 a barrel, their highest level since late July, according to Investing.com. The international benchmark, Brent oil futures, had previously settled up 3.9% at a four-month high of $101.75 a barrel on Wednesday.

Escalating Military Action

The price surge followed reports of the most severe naval strikes since the conflict began in February. Iran stated it had struck 10 ships in and around the critical Strait of Hormuz on Wednesday. In response, the U.S. reported that it retaliated by sinking five Iranian oil tankers.

This direct military exchange has severely impacted transit through the Strait of Hormuz, a vital chokepoint for global oil shipments. According to the report, flows through the strait are currently at a fraction of their pre-war levels, keeping energy markets on edge.

Widening Supply Risks

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Concerns over regional instability intensified this week after Yemen’s Iran-backed Houthi group reportedly attacked energy infrastructure in Saudi Arabia. This development suggests the conflict's impact on energy supplies could expand beyond the immediate vicinity of Hormuz.

Analysts at ANZ noted the gravity of the situation in a research note. "The tit-for-tat attacks suggest oil flows from the Persian Gulf are likely to remain disrupted for the foreseeable future," the analysts wrote. "The broadening of the conflict threatens to risk even deeper disruption to oil supplies that had already left the oil market scrambling to adjust."

Political Uncertainty Fuels Volatility

Adding to market uncertainty are conflicting signals from Washington. While U.S. President Donald Trump told reporters the conflict would end after the November mid-term elections, a Wall Street Journal report cited top advisers who warned the war could persist through the remainder of the president's term.

This lack of a clear path to de-escalation suggests that the geopolitical risk premium currently factored into oil prices is likely to remain, potentially supporting elevated prices for an extended period.