Brent crude jumps 4% to $90 on Iran energy strike threat

US and Israeli officials discussed striking Iranian power plants and refineries over the weekend, before Monday's market open, sending Brent crude up 4 percent to $90.38 a barrel and WTI near $86 in electronic trading.

"We're going to hit them very hard," President Donald Trump said after Iran fired ballistic missiles at US forces in Jordan, with CBS reporting that Washington and Jerusalem had not yet finalized an attack order.

Oil prices soared more than 8 percent on Wednesday before easing about 1 percent Thursday, with Brent just below $90. US stocks ended sharply lower on the jump, while the yield on 30-year US Treasury bonds hit their highest levels since 2007.

A strike on Iranian energy infrastructure would tighten an already strained market, with Tehran controlling the Strait of Hormuz, the conduit for roughly a fifth of global crude. If the attack proceeds, Brent could push well above $90; if Washington holds off, the risk premium may unwind quickly.

Strikes widen beyond the battlefield

The US military said Wednesday it completed a two-hour operation striking dozens of Islamic Revolutionary Guard Corps targets in Iran, including military command centers, missile and drone facilities, coastal surveillance sites and maritime capabilities. The strikes followed Iran's launch of multiple ballistic missiles at US bases in Jordan, which Washington called an attempted surprise attack.

Saudi Arabia joined US forces in strikes on Iran-aligned groups in eastern Iraq, a first in the five-month war, in retaliation for drone attacks on Saudi oil facilities launched from Iraqi territory. Iraq's Hashed al-Shaabi alliance said the attacks killed at least 20 of its members, including five Iranian advisors.

Hormuz and Suez add a supply premium

Iran said it struck three tankers attempting to transit the Strait of Hormuz along an unauthorized route, insisting it has "full control" of the waterway that carries about a fifth of global oil. A drone strike on gas vessels at Egypt's Damietta port, near the Suez Canal, raised the prospect of a new front threatening one of the last remaining export routes for Saudi crude.

The war began in February, when the US and Israel launched a bombing campaign that Trump said would last only a few weeks. A temporary ceasefire in June collapsed over renewed fighting on the Strait of Hormuz, and the latest escalation marks the first time Saudi Arabia has joined US strikes.

The closure of Hormuz has lent greater significance to the Red Sea, Riyadh's alternative export route, though Yemen's Iran-allied Houthis declared a naval blockade on Saudi Arabia last week. London's marine insurance market widened its "high risk" zone in the Red Sea to include more of the coast adjacent to Saudi ports.

For energy markets, the risk is asymmetric: a strike on refineries and power plants would remove processing capacity at a time when inventories are already tight, while any disruption to Hormuz would hit roughly a fifth of global supply. Traders are pricing the worst-case scenario into the front of the curve, with the spread between near-dated and deferred contracts widening as the weekend approaches.

This article is for informational purposes only and does not constitute investment advice.