Brent Crude Nears $100 as US-Iran Strikes Escalate and Hit Oil Tankers Near Kharg Island

Oil prices surged overnight Tuesday into Wednesday as escalating military exchanges between the United States and Iran drove Brent crude to $99.37 a barrel, approaching the $100 threshold not seen since late July. The rally was triggered by Iran's missile launch at Jordan and a separate Iranian ballistic missile attack on two U.S. Navy warships in the region, which prompted retaliatory U.S. strikes on Iranian oil tankers linked to the Islamic Revolutionary Guard Corps. CENTCOM confirmed it permanently disabled the crude carrier M/T Downy off the coast of Kharg Island, Iran's primary crude export hub, and the M/T Stark 1 near Jask, with four additional IRGC-linked tankers struck in the Gulf of Oman.

The strikes near Kharg Island sharpened fears of broader supply disruption through the Strait of Hormuz. Goldman Sachs warned that if Persian Gulf oil flows remain constrained, Brent could exceed $120 per barrel, while HSBC analysts cautioned that inventory draws could accelerate if diplomacy fails. West Texas Intermediate rose alongside Brent, reaching $94.47 a barrel.

The oil spike fed directly into broader market anxiety. Markets moved to price more than a 50% probability of a Federal Reserve rate hike this month, as higher energy prices threatened to push inflation higher. The three major U.S. stock averages had already posted losses in Tuesday's regular session, and futures were little changed after hours. Friday's U.S. CPI report is now seen as a critical test of whether inflationary pressure from energy costs is broadening.