Iran Strikes Raise Oil Risk as Ceasefire Falters

Negotiations for a final deal had been due to start after the funeral for Supreme Leader Ayatollah Ali Khamenei, who was killed Feb. 28. The funeral ends Thursday. The talks are meant to address fully reopening the strait and rolling back Tehran's nuclear programme.

For traders, the immediate risk is a full disruption of Strait of Hormuz traffic. That would spike crude prices and hit tanker stocks, while benefiting defense contractors. The trigger to watch is any Iranian retaliation against US military sites in the Persian Gulf or further attacks on commercial vessels. A return to negotiations would reduce the risk. Trump's mixed signals – threatening escalation while allowing talks – keep the outcome uncertain.

The US Central Command said the strikes were meant to “impose heavy costs for targeting and attacking commercial shipping crewed by innocent civilians in an international waterway.” Iranian state media reported explosions in Bandar Mahshahr, Bandar Abbas, and Bushehr, the latter home to Iran's nuclear power plant. Eight members of Iran's army air and naval forces were killed, state television said.

Bahrain, home to the US Navy's 5th Fleet, and Kuwait, home to US Army forces, sounded missile alerts Wednesday morning.

The situation remains fluid. The next concrete marker is whether Iran retaliates militarily or returns to the negotiating table after Khamenei's funeral.