Crude oil prices are experiencing volatile trading as Iran claims a new wave of attacks on American bases, while Israel signals its readiness to escalate its involvement in the conflict, further heightening risks to regional energy supplies.
West Texas Intermediate futures briefly touched their highest level since late July before paring gains to trade near $91 a barrel, with Brent holding above $95. Over the previous three sessions, prices had accumulated a gain of roughly 7%. The renewed cycle of retaliatory strikes between Washington and Tehran threatens to reverse the recent recovery in crude flows through the Strait of Hormuz. With the Persian Gulf conflict dragging on, there are currently few signs that diplomatic efforts can deliver a lasting solution.
Iran's military announced Thursday that it had used missiles and drones to strike American military facilities in Kuwait and the United Arab Emirates, according to the official Islamic Republic News Agency. Kuwait stated it had responded to the missile and drone threats, while the UAE has not reported any related incidents. Saudi Arabia kept its flagship crude pricing unchanged for next month, signaling less market tightness than some investors had anticipated, which contributed to prices pulling back from session highs.
Ryan McKay, senior commodity strategist at TD Securities, noted that "the renewed US-Iran hostilities once again highlight how fragile any unratified agreement or short-term de-escalation truly is. Iran has not abandoned its grip on the strait, and the US is helping vessels transit via the Oman route, which ultimately keeps the probability of further escalation high."
Israel, for its part, has signaled it stands ready to re-enter the fight if necessary. Defense Minister Israel Katz stated that an Iranian attack on Israel would mean Israel is no longer bound by existing constraints when responding to the Tehran regime. Katz warned, "We will strike all state-level military and civilian infrastructure — including energy infrastructure — and send Iran back to the Stone Age."
The escalation between Washington and Tehran, following a relatively calm period, has driven a fresh surge in energy prices, with growing concerns that the war could become protracted.
Prices: As of 12:05 pm New York time, October WTI futures were essentially flat around $91.26 a barrel, while November Brent futures traded at $95.52 a barrel.