Oil Prices Jump Over 3% After Iran Strikes US Airbase in Escalating Tensions

Oil prices rose sharply on Thursday, climbing more than 3 percent after Iran’s Revolutionary Guards said they had targeted a US airbase in retaliation for an American strike near Bandar Abbas airport, heightening fears of further disruption to global energy supplies.

Brent crude futures increased $3.51, or 3.72 percent, to $97.80 a barrel by 06:44 a.m. Saudi time. The more actively traded August contract gained $3.35, or 3.63 percent, to $95.60, while the July contract neared expiry. US West Texas Intermediate crude also advanced, rising $3.31, or 3.73 percent, to $91.99 a barrel.

The rebound followed a sharp decline in the previous trading session, when both benchmarks fell more than 5 percent to a one-month low. That earlier drop had been driven by market optimism over a possible US-Iran agreement aimed at ending hostilities and reopening the Strait of Hormuz, a critical route for global oil shipments.

Iran’s Revolutionary Guards said they launched the attack after what they described as a US strike near Bandar Abbas airport early Thursday morning. The Iranian Tasnim news agency reported that the Guards warned any further action would be met with a “more decisive” response, raising concerns of continued escalation.

A US military official told Reuters that American forces had carried out strikes on a military site in Iran, which they believed posed a threat to US personnel and commercial shipping through the Strait of Hormuz.

Market analysts said the renewed violence has added uncertainty back into already fragile energy markets. “Oil supply remains constrained, and key sticking points have yet to be resolved,” said Daniel Hynes, commodity strategist at ANZ, noting that geopolitical risks continue to dominate price movements.

At the same time, supply data from the United States added further complexity to market sentiment. According to American Petroleum Institute figures, US crude inventories fell by 2.8 million barrels last week, marking the sixth consecutive weekly decline. This indicates tightening domestic supply conditions even as global tensions remain elevated.

Official inventory data from the US Energy Information Administration are expected later on Thursday, delayed by one day due to the Memorial Day holiday.

Traders remain focused on developments in the Middle East, where shifting signals of possible diplomatic progress have repeatedly clashed with bursts of military escalation. With both supply disruptions and geopolitical uncertainty in play, energy markets are expected to remain volatile in the near term.