Oil markets jumped on Friday as U.S.-Iran fighting escalated across the Gulf, with traders now bracing for the possibility that both the Strait of Hormuz and the Red Sea’s Bab al-Mandab Strait could be shut simultaneously.
Brent crude climbed $1.53, or 1.82%, to $85.76 a barrel by 09:51 GMT, while U.S. West Texas Intermediate rose $1.69, or 2.14%, to $80.64. The moves cap a punishing week for energy markets: both benchmarks are up nearly 13% since Monday, with Brent on course for its third straight weekly gain and WTI its second.
The rally follows an even sharper move last week, when Brent jumped more than 4% in a single session as the two sides traded attacks over control of the Hormuz waterway.
The renewed spike traces back to the breakdown of a fragile truce reached last month. Prices had briefly eased toward pre-war levels before renewed hostilities threatened to derail that ceasefire, sending Brent up more than 3% in a single session.
Since then, the conflict has escalated steadily: this week alone, Brent extended a roughly 9.6% single-day gain and touched its highest level in a month as fighting stretched into a third straight day.
By Friday, that fighting had reached a sixth consecutive night. Iran said it had struck U.S. facilities across the Middle East, including for the first time in this round of the war targets inside Syria. U.S. Central Command confirmed it had opened a fresh wave of strikes on Thursday aimed at further degrading Iran’s military capabilities, continuing a campaign CENTCOM has described as targeting Iranian coastal defenses, missile and drone sites, and naval assets.
What has unnerved markets this week is not just the fighting itself but its geography. Oil flows through the Strait of Hormuz, the passage through which roughly a fifth of the world’s oil and gas moves, have already dropped sharply since the truce collapsed.
Now Iran is reportedly pressing the Yemen-based Houthi movement to shut the Red Sea route as well, should the U.S. strike Iranian power infrastructure.
That threat carries outsized weight because so much oil has already been rerouted there. Commerzbank analysts noted that transit through the Red Sea has risen substantially since the war began, as Saudi exporters diverted cargoes away from Hormuz.
A blockade of Bab al-Mandab on top of the existing Hormuz disruption, the bank’s analysts warned, would very likely send oil prices even higher.
The International Energy Agency’s Executive Director, Fatih Birol, sounded a similar note of caution on Thursday at a Council on Foreign Relations event in Washington, saying oil security remains a serious concern and that he would grow more worried still if conditions fail to improve in the coming weeks.
The fighting is no longer confined to Iran and U.S. forces. Qatar’s defence ministry said its armed forces intercepted an Iranian missile attack early Friday, while the interior ministry reported that a child was injured by shrapnel from the interception.
Qatari media reported the strikes came in two waves before dawn, apparently aimed at the Al-Udeid air base, the largest U.S. installation in the region, and arrived just as the country was emerging from a four-day mourning period for its former emir.
Kuwait was also hit. The country’s electricity ministry said one of its power generation and water desalination stations had sustained damage in an Iranian attack, while Kuwait’s armed forces separately reported intercepting dozens of hostile drones over the preceding days.
With prices already up nearly 13% on the week and analysts warning that a Red Sea closure would compound an already-restricted Hormuz, traders are watching for any sign of de-escalation or further widening of the conflict as the weekend approaches.
For now, the market’s message is unambiguous: every night of strikes is being priced directly into the cost of a barrel of crude.
WHAT YOU SHOULD KNOW
Oil is up nearly 13% this week and climbing because two chokepoints, not one, are now at risk the Strait of Hormuz is already disrupted by direct U.S.-Iran fighting, and Iran is pushing the Houthis to shut the Red Sea route too.
Since traders had already rerouted much of the region’s oil through the Red Sea to avoid Hormuz, losing both passages at once is the real threat driving prices higher. Until the fighting eases, expect continued volatility at the pump and beyond.
