Oil Rallies 3% as Iran Strikes Kuwait Water Plants, Natural Gas Gains

Oil prices surged 3% on Friday, with WTI crude climbing above $82 a barrel and Brent crude topping $88, after Iran struck Kuwait's water desalination plants, widening the conflict beyond military targets. The escalation follows President Trump's warning that the U.S. would intensify strikes on Iran's critical infrastructure if Tehran continued to disrupt shipping in the Strait of Hormuz. Traffic through the strait has declined sharply, traders said, though some oil still transits the key waterway.

Natural gas futures also gained, testing $2.90 per million British thermal units. Weather models point to above-average demand over the next two weeks, supporting prices. From a technical perspective, a move above $2.90 opens the path to the $3.00-$3.05 resistance zone, chart analysts said. Support sits at $2.75-$2.80. The natural gas market has been closely watched as short positions near 207,000 contracts face pressure from the rally.

The broader macro transmission is straightforward. Higher oil prices feed into inflation expectations, which could keep central banks on a tighter path. The dollar edged higher against the yen, while commodity currencies like the Canadian dollar and Norwegian krone strengthened. Traders are watching for further escalation over the weekend. Any disruption to oil production or shipping in the Gulf could push prices higher, analysts said.