U.S.-Israel War on Iran Sends Crude Oil Prices Surging Amid Strait of Hormuz Tensions

West Texas Intermediate crude oil prices climbed $2.90 per barrel, or 3.5%, to $86.33 in early Wednesday trading as Gulf oil supplies remained severely disrupted by the ongoing U.S.-Israeli military campaign against Iran. The rebound followed a sharp 11% single-day plunge on Tuesday — the steepest percentage decline since 2022 — after President Donald Trump suggested the conflict could end quickly. Brent futures were also set to resume trading at 0100 GMT.

Despite Trump's brief optimism, U.S. and Israeli forces carried out what the Pentagon and Iranian witnesses described as the most intense airstrikes of the war on Tuesday. The U.S. Central Command also reported eliminating 16 Iranian mine-laying vessels near the strategically critical Strait of Hormuz, through which a significant portion of the world's oil supply flows. Trump has repeatedly warned Iran to remove any mines from the waterway and stated the U.S. stands ready to escort tankers when needed — though sources told Reuters the Navy has so far declined shipping industry escort requests, citing unacceptably high risk levels.

Oil market volatility has been extreme. Prices briefly surged above $119 per barrel on Monday, their highest level since June 2022, before Tuesday's dramatic selloff. Analysts at IG Sydney expect crude to remain headline-driven, fluctuating within a broad $75 to $105 range in the near term. Energy consultancy Wood Mackenzie has warned the conflict is already removing roughly 15 million barrels per day from global supply, with prices potentially spiking to $150 per barrel if the situation worsens.

G7 leaders, coordinated by French President Emmanuel Macron, convened a video call Wednesday to weigh emergency oil stockpile releases. Meanwhile, American Petroleum Institute data showed U.S. crude, gasoline, and distillate inventories all declined last week, reflecting tightening supply conditions across energy markets.