Oil prices rose Friday after the United States and Iran exchanged fire in the Strait of Hormuz, a flare-up in one of the world’s most important energy corridors that tested a fragile ceasefire even as President Donald Trump said the truce remained in place.
The global Brent benchmark climbed almost 3% at one point to nearly $103 a barrel before easing back to around $100. The move reflected how quickly traders are responding to military risk around the strait, which lies south of Iran and normally carries more than a fifth of the world’s oil and gas.
The waterway has been effectively blocked since the US-Israel war with Iran began on Feb. 28, according to the source reporting. Before the conflict, oil was trading at about $70 a barrel. That gap has made each new exchange of fire a market event as well as a military one.
Both sides blame the other
US Central Command said American forces carried out self-defence strikes after Iranian forces launched multiple missiles, drones and small boats at three US Navy guided-missile destroyers transiting the strait. CENTCOM said no US assets were hit and that it targeted Iranian military sites involved in the attack, including missile and drone launch locations and command-and-control nodes.
Iran’s account differed sharply. Iranian state media and military statements accused the US of violating the April ceasefire by targeting an Iranian oil tanker and another vessel moving toward the strait, as well as carrying out aerial attacks along coastal areas including Bandar Khamir, Sirik and Qeshm Island. Iran said its forces responded by attacking US military vessels and causing significant damage, a claim the US denied.
Trump said several Iranian small boats had been destroyed and that missiles and drones aimed at US ships were knocked down. He also played down the exchange in an interview with ABC News, calling the Iranian strikes “just a love tap,” while warning that Tehran would face heavier attacks if it did not agree to a deal.
CENTCOM said it “does not seek escalation but remains positioned and ready to protect American forces.” Iranian state media later reported that the situation was “back to normal now.”
A ceasefire under strain
The clash came as Washington and Tehran were still testing a diplomatic path out of the conflict. Iran’s foreign ministry had said it was considering a US proposal, while Pakistan has been involved in efforts to turn the ceasefire into a permanent end to the war.
Trump has said negotiations are continuing and has repeated Washington’s demand that Tehran must never have a nuclear weapon. Iranian officials have pushed back against US pressure, and one senior Iranian parliament member described a reported 14-point memorandum of understanding as a “wish list.”
The confrontation also followed days of wider tension around the strait. Trump had announced a US plan, dubbed Project Freedom, to guide stranded commercial ships through the waterway. Iran warned that ships trying to use the strait without permission from the Islamic Revolutionary Guard Corps could be fired on, according to source reporting.
The United Arab Emirates has also reported Iranian missile and drone attacks during the latest phase of the crisis, with authorities saying air defences engaged incoming threats and that three people suffered moderate injuries. Iran has denied or disputed parts of the accusations around recent attacks, while blaming US military actions for worsening the situation.
Energy costs spread beyond crude
The market impact is not limited to crude oil. Jet fuel prices have risen by about half during the conflict, adding pressure on airlines. British Airways owner IAG said Friday it expected fuel costs to reach €9bn this year, about €2bn higher than last year, though it said it had agreed prices for roughly 70% of its fuel needs for the rest of the year and saw no current fuel availability problems in its main markets.
IAG shares fell more than 5% in early London trading, a sign that investors remain wary of how long disruption in the Gulf could last. Analysts cited in the source reporting described the ceasefire as fragile, with markets reacting to the risk that isolated clashes could grow into a broader disruption.
For now, the central question is whether the US and Iran can keep the ceasefire alive while continuing military operations around a partially blocked waterway. A durable easing of oil prices may depend less on Friday’s immediate damage claims than on whether ships can move safely through Hormuz and whether negotiations produce more than another pause in fighting.
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