Oil Jumps 2.9% as US Strikes on Iran Threaten Supply

Oil surged 2.9% as US strikes on Iranian targets pushed the region closer to a broader conflict. Iranian President Masoud Pezeshkian cut short his visit to Iraq and flew back to Tehran, his office said. His government weighed a response to what it called an act of aggression.

Brent crude crossed $85 a barrel, the highest in two weeks. Traders priced in a risk premium for supplies passing through the Strait of Hormuz, a chokepoint carrying roughly 20% of global oil. The move echoed the pattern seen in Oil Surges 2.9% as US Strikes on Iran Threaten Hormuz Ceasefire, where a similar escalation drove prices.

The Pentagon confirmed the strikes hit sites linked to Iran's Revolutionary Guard in Syria and Iraq. The White House described them as a direct response to attacks on US personnel in the region. Iran's foreign ministry condemned the action and reserved the right to respond at a time and place of its choosing.

For crude markets, the immediate question is retaliation. A strike on Saudi or UAE infrastructure would push prices significantly higher. A diplomatic protest or a limited response confined to Iraq-based militia attacks would likely see the risk premium unwind within weeks.

The tanker market is already reacting. War risk insurance premiums for vessels transiting the Gulf are climbing, several brokers said. Some shipping companies have started diverting cargoes to longer routes around Africa.

Iran's president returned to Tehran on Monday evening. No formal response has been announced. The next catalyst is any disruption to tanker traffic through the strait.