Oil prices jumped on Thursday after fresh US military strikes on Iran rattled an already fragile ceasefire in the Middle East, pushing Brent crude up 1.8 percent to $95.95 a barrel and West Texas Intermediate up 1.7 percent to $90.17. The move reversed most of Wednesday's declines, which had come on optimism that a peace deal was close.
A US official described the latest actions as "measured, purely defensive, and intended to maintain the ceasefire." The military said it shot down four Iranian drones and struck a control centre in the southern Iranian city of Bandar Abbas. Iran's state media, meanwhile, reported that its forces had fired on four ships in the Strait of Hormuz. Kuwait said its air defences were responding to missile and drone attacks, widening the visible footprint of the conflict.
The signals from both sides were contradictory. An Iranian official said renewed hostilities with the United States were unlikely, while US President Donald Trump threatened to "finish the job" if a peace deal was not reached. That tension, between diplomatic language and active military exchanges, captures how unstable the current situation is.
Why the Strait of Hormuz matters so much
The Strait of Hormuz is a narrow waterway between Iran and Oman through which a large share of the world's seaborne oil passes. The conflict has all but halted shipping through the strait for months, directly tightening global oil supply. With Brent crude sitting just below $100, analysts note that any further escalation could push prices over that psychologically important level, which would amplify inflation pressure across oil-importing economies.
Asian stock markets fell broadly on Thursday, with Hong Kong's Hang Seng index dropping more than 1.5 percent. Seoul slipped nearly 1 percent and Shanghai edged 0.3 percent lower. Tokyo was flat at midday. Taipei bucked the trend, gaining more than 1 percent. The declines followed a strong Wednesday session when investors, buoyed by enthusiasm around artificial intelligence, looked past the conflicting Iran headlines.
The technology sector offered a rare bright spot. South Korean chipmaker SK Hynix hit a $1 trillion market capitalisation, joining Samsung Electronics and TSMC in Asia's trillion-dollar tech club, alongside US chipmaker Micron. The AI-driven chip rally has run in parallel with elevated energy costs, creating a split in market dynamics: tech is climbing while energy-sensitive sectors face pressure.
What changes if oil stays elevated
The economic risk from sustained high oil prices is straightforward. Several major Asian economies rely heavily on Middle East oil imports, and a prolonged spike in energy costs feeds directly into consumer prices. Economists warn that if inflation worsens, central banks may be forced to raise interest rates, increasing borrowing costs and slowing economic growth at a time when many economies are already navigating a difficult environment.
Stephen Innes at SPI Asset Management put the trader dilemma plainly: every headline is pulling markets in a different direction, and the underlying question remains unresolved. "The Strait may eventually reopen fully, but until there is something more concrete than draft frameworks and political theatre, every barrel remains hostage to headline volatility, even if sub-$100," he said.
The practical consequence is that oil markets are trading on news flow rather than fundamentals, which makes price moves sharp and hard to predict. Until either a credible ceasefire holds or a formal deal is signed, traders have no stable baseline to price from. That uncertainty itself has a cost: businesses that need to plan fuel budgets, airlines hedging jet fuel, and governments managing subsidy bills are all operating with less visibility than usual.
Watch for any concrete movement in peace talks, a sustained change in shipping activity through the strait, or further military exchanges that could push Brent through the $100 mark. Any of those would be the next major test for both oil markets and the broader Asian economic outlook.
Qatar's foreign ministry said mediators including Qatar, Pakistan, and Oman have reached "very progressive stages" in efforts to end the US-Iran war, pushing Brent crude down more than four percent.
Qatar confirmed it is mediating between the US and Iran but said no direct talks are currently planned. The clarification follows conflicting statements from President Trump, who claimed talks are under way, and Tehran, which denied any dialogue is happening.
Saudi Aramco reported sharply higher second-quarter 2026 profits as the Iran war restricts global oil supply and pushes crude prices up. Other oil supermajors also posted outsized earnings, raising concerns about sustained fuel cost pressure for importing economies.
President Trump called current Iran negotiations the "last chance" to end five months of conflict, pushing oil prices higher. Tehran denied formal talks are taking place, raising the risk of a diplomatic breakdown with direct consequences for global energy markets.
