Oil prices saw a notable increase on Thursday as military tensions flared in the Middle East, with the U.S. conducting strikes against Iranian targets and Iran retaliating against Washington’s allies. The escalation has prompted concerns over potential prolonged disruptions to global energy flows, despite analysts suggesting the market is currently better positioned to absorb such shocks.
Global oil markets reacted sharply on Thursday, with prices edging higher as geopolitical tensions in the Middle East escalated following fresh military actions. The United States launched strikes against Iranian military infrastructure, while Tehran reportedly retaliated against U.S. allies in the Gulf, signaling a dangerous new phase in the long-standing rivalry.
U.S. crude oil futures for July delivery climbed 0.88% to reach $90.82 per barrel. Meanwhile, the international benchmark, Brent crude, for August delivery, saw a gain of 0.66%, settling at $93.7 per barrel.
The immediate fallout from the conflict was evident across the region. Kuwait took the precautionary measure of closing its airspace and intercepting incoming projectiles. Simultaneously, Israel issued warnings about potential missile launches from Lebanon targeting its northern communities, further highlighting the widespread instability.
Iranian state media, specifically the Tasnim news agency, reported that Iran had conducted missile and drone attacks on several U.S. military facilities located in Kuwait and Bahrain. These targets reportedly included the Ali Salem and Ahmad al-Jaber air bases in Kuwait, and the Sheikh Issa air base in Bahrain. Bahraini authorities later confirmed that their air defense systems had successfully intercepted and neutralized these aerial threats.
These latest developments followed a directive from President Donald Trump, ordering U.S. strikes on Iranian military assets. The U.S. Central Command stated these targets — encompassing surveillance, communication, and air defense infrastructure — posed a direct threat to American forces and commercial shipping operations in the vital regional waterways. In a post on X, U.S. Central Command further confirmed that additional "self-defense strikes" were launched against multiple targets in Iran at 5:15 p.m. ET, in response to what it termed "Iran's unwarranted and continued aggression."
Concurrently, Iranian state media reported that Tehran had carried out its own missile and drone attacks against U.S. vessels operating within the strategically crucial Strait of Hormuz.
President Trump had previously warned of intensifying Washington's military response against Iran, as part of his administration's broader strategy to pressure Tehran into a new deal with the United States.
Despite the fresh escalation, Rystad Energy offered a nuanced perspective on Thursday, suggesting that the oil market is currently better equipped to handle disruptions compared to previous crises. The consultancy cited record U.S. crude exports, a notable softening in Chinese demand, and the availability of alternative export routes that lessen global reliance on the Strait of Hormuz. However, Jorge Leon, senior vice president at Rystad Energy, cautioned that the prospects for a near-term diplomatic resolution have diminished. This leaves oil prices highly susceptible to significant fluctuations as investors meticulously evaluate whether the current hostilities will remain contained or spiral into a more protracted and destabilizing conflict.
