Oil Rises as US Strikes Iran Again

Oil prices climbed on Thursday after the United States launched fresh military strikes against Iran, pushing back expectations of a ceasefire and raising new doubts about when the Strait of Hormuz might reopen to normal shipping traffic.

Both Brent crude and West Texas Intermediate futures posted notable gains in early trading. The moves reflect how directly energy markets track geopolitical risk in the Persian Gulf, where roughly 20 percent of global oil supply passes through the Strait of Hormuz on any given day.

Why the Strait of Hormuz Matters So Much

The Strait of Hormuz is a narrow waterway between Iran and Oman. It is the single most important chokepoint in global oil trade, connecting Gulf producers including Saudi Arabia, the UAE, Iraq, and Kuwait to buyers in Asia and Europe. Any sustained disruption, whether physical or through elevated insurance and transit risk, forces buyers to seek alternative supply routes or pay higher premiums, both of which lift crude prices.

The latest U.S. strikes have done two things to the market simultaneously. First, they have reduced the near-term probability of a diplomatic resolution that would restore free passage through the strait. Second, they have signaled to shipowners and insurers that the risk environment is not stabilizing. Shipowners are now expected to approach voyages through the strait with greater caution, which in practical terms means slower scheduling, route changes, or outright avoidance where alternatives exist.

Insurance Costs Are the Immediate Pressure Point

Insurance providers are reviewing policy terms following recent attacks on vessels in the region. This is significant because war-risk insurance premiums on tankers transiting high-threat zones can multiply within days of an incident. When premiums spike, shipping costs rise, and those costs are ultimately passed through to crude buyers in the form of wider price differentials. For Asian refiners who depend heavily on Gulf crude, this translates directly into higher input costs.

The combination of cautious shipowners and tightening insurance terms creates a supply-delivery risk that markets price in quickly, even before any physical barrel goes missing. Traders move first on probability, and right now the probability of smooth Hormuz transit has fallen.

Beyond the immediate freight and insurance dynamics, the fresh strikes complicate the broader diplomatic picture. Any negotiation pathway that could have led to sanctions relief or a formal reopening of the strait now faces a longer timeline. That matters for oil supply forecasts. If Gulf producers cannot ship freely, effective global supply tightens regardless of what production quotas say on paper.

For crude importers including India, which sources a large share of its oil from Gulf producers, prolonged Hormuz tension means higher landed costs, pressure on the current account, and potential pass-through to domestic fuel prices. India's refiners, several of whom have been active buyers of discounted Gulf and Iranian crude in recent years, face the sharpest near-term exposure among Asian economies.

What to watch next: whether the U.S. strikes prompt retaliatory action from Iran that directly targets shipping, any formal statement from major Gulf producers on export continuity, and whether insurance underwriters issue revised war-risk exclusions that effectively freeze commercial tanker traffic. A sustained closure or even a partial slowdown at the strait would push Brent meaningfully higher from current levels. Diplomatic signals in the coming days will be the key variable the market is trading on.