Brent crude closed at its highest level since May after Iran and the U.S. exchanged their largest strikes on shipping since their conflict began. Brent and WTI extended those gains on Thursday as the Strait of Hormuz stayed a flashpoint and Treasury yields climbed alongside oil.
Brent crude settled at $101.21 a barrel on Wednesday, its highest close since May 22, when it ended the day at $103.54. WTI settled at $96.05 a barrel the same day, also its best close since May 22's $96.60.
Hormuz strikes drive the latest leg up
Oil extended its climb on Thursday after Iran said it struck ten ships in and around the Strait of Hormuz on Wednesday, while the U.S. said it retaliated by sinking five Iranian oil tankers. It was the largest exchange of strikes on shipping since the conflict began in February, following a tense stalemate through much of August. Flows through the strait remained at a fraction of pre-war levels.
Yemen's Iran-backed Houthi group also attacked Saudi Arabian energy infrastructure this week, adding pressure on the Bab al-Mandeb Strait, another route Gulf producers rely on. Renewed U.S.-Iran military action drove Brent futures 1.1% higher to $102.30 a barrel and WTI 1.6% higher to $97.57 a barrel by 05:50 ET Thursday.
Bond yields add to the squeeze
The rally is not confined to crude. Monaxa's head of risk, Artem Bakushev, noted that the U.S. 10-year Treasury yield climbed to roughly 4.84%, near its highest level since late 2023, a combination he described as an unfriendly setup for risk assets. Higher energy costs squeeze transport, production and household budgets, while elevated yields raise financing costs and compress valuations at the same time. Bakushev added that Thursday's U.S. producer-inflation data, jobless claims and crude-inventory figures would help determine whether the next move is driven by inflation, the dollar, or physical scarcity, according to his note.
No quick resolution in sight
President Donald Trump told reporters Wednesday that the Iran war will end after the November midterm elections. However, a Wall Street Journal report cited by Investing.com said Trump's top advisers have warned the conflict could continue through the remainder of his term, which runs until January 2029.
Standard Chartered's energy research head, Emily Ashford, wrote in a note that the bank expects oil prices to keep grinding higher through the third quarter, with little sign that diplomatic progress will ease export restrictions through Hormuz or the risks facing Red Sea shipping.
Sources: Investing.com, Rigzone.com
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