BY COMFORT OGBONNA
Oil prices climbed more than 1% on Thursday after the United States launched a new wave of military strikes against Iran, escalating tensions in the Middle East and raising fresh concerns about the security of global energy supplies. The renewed conflict weakened expectations that diplomatic negotiations could quickly bring an end to the fighting or lead to the full reopening of the strategically important Strait of Hormuz, a vital shipping route that handled roughly one-fifth of the world’s oil trade before the conflict began.
Brent crude futures gained 86 cents, or 1.1%, to trade at $78.88 per barrel, while West Texas Intermediate crude rose 85 cents, or 1.2%, to $74.37 per barrel during early trading. The gains extended Wednesday’s rally, when both benchmark contracts surged by more than a dollar in after-hours trading following reports of the latest U.S. military operation.
The oil market had already been under pressure after President Donald Trump warned that additional military action against Iran remained possible. Those comments pushed both Brent and WTI to their highest settlement levels in more than two weeks, as traders priced in the growing possibility of prolonged instability in one of the world’s most important oil-producing regions.
Market analysts said the latest military developments have significantly increased uncertainty. According to analysts at ING, the fresh U.S. strikes have undermined confidence in what had been viewed as a fragile ceasefire, prompting investors to add a geopolitical risk premium back into oil prices.
The U.S. military said the latest operation targeted Iranian military infrastructure with the objective of protecting freedom of navigation through the Strait of Hormuz. Officials stated that the campaign followed President Trump’s announcement that an interim agreement intended to end the conflict had effectively collapsed.
According to the U.S. military, approximately 90 Iranian military targets were struck during the operation. The targets reportedly included air defense systems, coastal surveillance installations, missile and drone storage facilities, naval assets, and logistics infrastructure positioned along Iran’s coastline. The strikes were intended to weaken Iran’s military capabilities and reduce potential threats to commercial shipping in the region.
Iran had earlier announced that it launched attacks against U.S. military installations in Bahrain and Kuwait, describing the attacks as retaliation for previous U.S. military operations targeting Iranian infrastructure. The exchange of strikes has intensified fears that the conflict could spread further across the region, potentially affecting energy production and transportation.
Before the outbreak of the war, roughly 20% of global oil supplies and a significant share of liquefied natural gas shipments passed through the Strait of Hormuz, making it one of the world’s most critical energy corridors. Iran’s geographic position gives it considerable influence over traffic through the waterway, making any disruption a major concern for global energy markets.
Analysts also noted that the surge in oil shipments through the strait seen in recent weeks may begin to slow as shipping companies reassess the risks of operating in the region. Increased security concerns could lead vessel operators to delay voyages, seek alternative routes where possible, or demand higher insurance premiums, all of which could contribute to higher transportation costs and tighter energy supplies.
Despite previous diplomatic efforts between Washington and Tehran, analysts believe the geopolitical outlook remains highly uncertain. Energy market experts say that while negotiations could eventually resume, the ongoing military confrontation is likely to keep oil prices elevated in the near term as traders continue to factor in the possibility of further disruptions.
Analysts at DBS Bank said Iran has strong incentives to prolong negotiations while maintaining strategic leverage, suggesting that the geopolitical risk premium embedded in oil prices is unlikely to disappear quickly. As a result, energy markets could continue to experience sharp price swings for several months, even if the longer-term outlook points toward a gradual easing of prices once regional tensions begin to subside.
With uncertainty surrounding military operations, shipping routes, and diplomatic negotiations, investors are expected to closely monitor developments in the Middle East. Any further escalation involving the Strait of Hormuz or additional attacks on energy infrastructure could trigger another sharp rise in crude prices, while meaningful progress toward a lasting ceasefire could help stabilize global oil markets.
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