Oil prices jumped more than 6% in early Asian trade after reports emerged of two tankers attacked in Iraqi waters amid the intensifying US-Israel war with Iran. West Texas Intermediate crude (CLc1) climbed 6.5% to $91.58 a barrel, while Brent (LCOc1) followed suit with sharp gains.
Attack Details
Two international oil tankers caught fire in the northern Persian Gulf near Iraq and Kuwait, with footage showing flames engulfing the vessels. Iraqi channels blamed Iran for the strike, which occurred as the conflict entered its 13th day. Iran has warned that no crude will pass through the Strait of Hormuz, a chokepoint for 20% of global oil supplies.
Market Snapshot
The tanker attacks fueled fears of broader supply disruptions, pushing WTI futures higher after touching near $120 a barrel earlier in the week. Brent crude traded around $90-96 per barrel recently, up over 30% in the past month amid war risks. Energy stocks like Exxon (XOM) and Chevron (CVX) rose, bucking broader equity weakness.
Equity and Safe Haven Moves
US stock futures tumbled, with S&P 500 (SPX) contracts down 0.1% to 6,775.80 and Dow futures off 0.3%. Gold (GCc1) gained 1.6% to $5,180.70 an ounce as investors sought safe havens. The dollar index (DXY) firmed slightly against risk-off flows, while 10-year US Treasury yields dipped to 4.13%.
Policy Responses
The International Energy Agency readied a release of 400 million barrels from strategic reserves to counter shocks. US President Donald Trump announced 172 million barrels from the Strategic Petroleum Reserve to cap price spikes. These moves aim to shield consumers from energy cost surges as the war shows no de-escalation signs.
Macro Implications
Higher oil threatens to stoke inflation across major economies, complicating central bank rate paths already strained by growth slowdowns. Sustained disruptions could shave global GDP by curbing transport and manufacturing, with airlines and shippers facing margin squeezes. “This tanker hit underscores supply fragility; expect sticky inflation unless diplomacy prevails,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Analyst Views
Traders eye persistent Hormuz threats as the key driver. “Iran’s blockade rhetoric is turning real; we’re pricing in 10-15% supply loss scenarios,” noted a JPMorgan energy trader. Broader risk-off sentiment lifted volatility, with VIX implied moves climbing.
Key Monitors
Traders watch for Strait of Hormuz transit updates, next US SPR drawdown announcements, and escalation signals from Iran or US allies. Upcoming OPEC+ output decisions and US inflation data will gauge policy shifts amid the oil shock.
