Brent crude settled above $90 a barrel Monday after the U.S. and Iran exchanged fire for the first time in a month, reigniting a conflict now in its seventh month. The renewed fighting followed a U.S. strike on an Iranian island in the Strait of Hormuz and an Iranian missile attack on a U.S. base in Jordan, while President Trump threatened to widen the campaign to Iran's main oil-export terminal.
Brent crude settled up 1.3% at $90.49 a barrel on Monday, its highest level in a week. West Texas Intermediate crude climbed 2.8% to $85.76, logging its biggest one-day gain since early August.
Strike on Larak Island draws Iranian retaliation
American forces struck two Iranian rocket launchers on Larak Island in the Strait of Hormuz on Sunday, a U.S. Central Command spokesperson confirmed. Iran's Revolutionary Guard Corps said the strike killed and wounded several of its soldiers and said it responded with missile strikes on a U.S. base in Jordan.
President Trump said the U.S. would hit back. According to MarketWatch: "We're going to hit them hard." He added that a response was coming.
Trump threatens Kharg Island as Hormuz talks stall
Trump also threatened Iran's main oil-export terminal, Kharg Island, in a Sunday social-media post. Iran denied the island was being attacked and said oil operations there continued, Investing.com reported. Mediators are meanwhile seeking a deal to reopen the Strait of Hormuz, through which a fifth of global oil supply passed before the war began in late February, but progress has stalled.
Sanctions fuel inflation and rate-hike worries
Treasury Secretary Scott Bessent said Monday that Iran is lashing out militarily because U.S. sanctions are inflicting economic pain on the regime, days after unveiling "Operation Economic Outcast," a package of sanctions on about 60 Tehran-linked entities.
Stephen Innes, managing partner at SPI Asset Management, wrote in a Monday client note that Brent near $90 lands the same morning Fed Chairman Kevin Warsh's Jackson Hole remarks are still rattling bond markets, so a costlier barrel of oil raises the odds of another rate hike. The rebound follows a stretch in which crude fell more than 5% last week on talks between Iran and Oman about reopening the strait.
The fighting also overshadowed a U.S.-Venezuela deal under which Venezuela would help develop 17 oil fields holding 65 billion barrels of proven reserves, which UBS said would have little immediate impact on crude or gasoline prices.
Sources: MarketWatch, CNBC, Investing.com
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