[Global] Iran-U.S. Military Clash Intensifies, Oil Breaks Above $100
Amid continued reports of tanker sinkings and explosions in the southern Strait of Hormuz, U.S. Central Command confirmed it had sunk five Iranian oil-carrying vessels, and Iran also fired ballistic missiles targeting naval vessels, though the U.S. military claimed it successfully evaded them. Amid this escalating tension, Brent crude broke above $100 per barrel, and WTI also rose to around $96 during Asian trading hours.
President Trump had repeatedly suggested that the war would end soon, but this time, for the first time, he made remarks pushing back the timeline, suggesting an end to the war would only come after the midterm elections. This contradicts prior expert forecasts that he would rush to end the war before the midterms to ease inflation pressure, prompting various interpretations — that it may be a political strategy to eliminate election-season material altogether, an attempt to neutralize the negotiating leverage Iran holds, or a smokescreen aimed at maximizing the impact of a behind-the-scenes settlement.
HSBC analyzed that disruptions to the Strait of Hormuz could become the new normal, and that alternative shipping routes alone would not be enough to fully offset the reduced volume, forecasting that Brent crude could rise to $120 per barrel if disruptions to Russian refining facilities are added to the mix. However, some assessed that since the market has already priced in some possibility of a prolonged war, there was no sharp drop following Trump's remarks.