The United States has carried out military strikes on Iran, with President Donald Trump citing an Iranian attack on a ship in the Strait of Hormuz as justification. The strikes mark a sharp escalation in tensions between Washington and Tehran at a moment when ceasefire negotiations were already under way.

The Strait of Hormuz is one of the world's most critical shipping chokepoints. Roughly a fifth of global oil trade passes through it, connecting the Persian Gulf to the open ocean. Any military exchange in or near this corridor carries immediate consequences for energy markets and global supply chains.

Trump's framing positions the strikes as a retaliatory action rather than an unprovoked offensive move, a distinction that matters both diplomatically and legally. The US is presenting the strikes as a defensive response to an act of aggression against a vessel in international waters.

Why It Matters

The timing is significant. Ceasefire talks were already in progress, suggesting that diplomatic channels had not fully broken down before the military action. Strikes launched during active negotiations tend to reset the baseline for any future talks, often at higher cost to both sides.

For oil markets, the combination of a military strike and a ceasefire backdrop creates acute uncertainty. Brent crude and WTI prices are likely to respond sharply to any signals about whether the Strait of Hormuz remains open to commercial traffic. Even a temporary disruption to tanker movement through the strait would ripple quickly into global fuel prices, shipping insurance costs, and energy security planning across Asia, Europe, and beyond.

India is directly exposed. It is one of the largest importers of crude oil from the Gulf region, and a meaningful share of that supply transits the Strait of Hormuz. Any sustained disruption raises India's import bill, puts pressure on the rupee, and complicates the government's inflation management ahead of a domestic demand cycle.

For Iran, the strikes present a difficult calculation. Retaliating further risks a broader military confrontation with the US. Absorbing the strikes without a visible response carries its own domestic and regional political costs. The path through which Tehran chooses to respond, whether militarily, through proxy actors, or via diplomatic pressure, will determine how quickly or slowly this situation stabilises.

What to Watch Next

The status of ceasefire negotiations is the single most important variable to track. If talks collapse entirely, the risk of further escalation grows quickly. If both sides signal a willingness to return to the table despite the strikes, markets may treat this as a contained incident rather than the start of a prolonged conflict.

Watch also for statements from Gulf Cooperation Council members, particularly Saudi Arabia and the UAE, who have significant economic and security interests in keeping the strait open and stable. Their public positioning in the coming days will indicate how isolated or supported the US action is within the region.

The Pentagon and the White House have not yet disclosed the specific targets, scale, or outcome of the strikes, so the full picture of what was hit and what damage was done remains unclear. Those details, when released, will shape both the diplomatic response and the market reaction.