Oil prices climbed sharply on Monday after the US strike on Larak Island, in which American forces destroyed two Iranian rocket launchers on Sunday, raising fears of wider supply disruptions through one of the world’s most critical energy corridors.
Brent crude, the international benchmark, gained 1.54% to $89.46 a barrel for November delivery. US West Texas Intermediate futures for October rose 1.44% to $84.60 per barrel. The moves came as traders weighed the risk of further conflict in the Middle East affecting oil flows through the Strait of Hormuz, a narrow waterway through which a large share of global energy shipments passes.
What happened on Larak Island
Navy Captain Tim Hawkins, a US Central Command spokesperson, confirmed the strike in a statement. ‘I can confirm that earlier today US forces struck two Iranian launchers on Larak Island. Islamic Revolutionary Guard Corps forces were observed preparing to launch rockets with sea mines into the Strait of Hormuz,’ he said.
According to the Associated Press, Sunday’s attack was the first publicly acknowledged US strike on Iranian positions since late July. Iran’s Revolutionary Guards Corps confirmed casualties from the strike: two people were killed and two others injured, according to BBC News.
Iran retaliates with missile strikes on US bases in Jordan
Tehran did not leave the strike unanswered. Iran’s Revolutionary Guards launched ballistic missiles at two US airbases in Jordan, King Hussein and al-Azraq, in retaliation, according to Al Jazeera English. Jordan’s armed forces said they intercepted eight missiles in Jordanian airspace, adding a further layer of tension to an already volatile situation in the region.
Iran’s Revolutionary Guards Corps had earlier said it had responded with attacks on American military bases in Jordan, a claim consistent with the Jordanian military’s account of the interceptions. The sequence of strikes and counter-strikes has drawn fresh attention to the potential for the conflict to spread beyond its current boundaries.
Vessel traffic through the Strait of Hormuz has already been severely disrupted by the Middle East conflict, which has entered its sixth month. The strait is a chokepoint for global energy shipments, and any sustained interruption to shipping there tends to move oil markets quickly.
US strike on Larak Island rattles energy markets
Analysts moved swiftly to assess what Sunday’s events mean for oil prices going forward. Tamas Varga, analyst at PVM Oil Associates, said ‘supply risk will persist and oil inventories will continue to deplete in the coming weeks and months,’ adding that ‘the Iranian crisis has likely changed the security status quo in the Middle East.’
Goldman, in a separate note, pointed to a broader pattern of attacks across the region. ‘Rising strikes on refineries in the Middle East and Russia have further constrained already-stretched global refining capacity, pushing refined products margins to new highs,’ it said. That pressure on refining infrastructure compounds the direct threat to shipping routes, creating two separate channels through which the conflict can push energy prices higher.
The US strike on Larak Island and Tehran’s subsequent retaliation against Jordanian-based American facilities mark a notable escalation in direct exchanges between US and Iranian forces. With missile interceptions now confirmed over Jordanian airspace and both sides having struck military assets, traders and governments alike will be watching closely for any further moves that could affect the flow of oil through the Strait of Hormuz in the days ahead.
