Oil Nears $100 as Iran Condemns Israeli Strike in Beirut

Global tensions tightened Thursday after Iran condemned an Israeli airstrike in Beirut, pushing Brent crude back toward $100 a barrel and casting fresh doubt on a U.S.-Iran peace deal. The strike, which killed a senior Hezbollah commander, occurred as Iran reviews a U.S. proposal to end the 69-day conflict that has shuttered the Strait of Hormuz, a waterway for a fifth of the world's oil.

"The secondary effect from this is actually whether these increased costs are eventually going to lead to inflation and demand destruction as a result, which could create a softened market environment in the second part of the year," Maersk CEO Vincent Clerc told the BBC, highlighting the war's cascading economic impacts.

The renewed uncertainty sent Brent crude futures rising over 2 percent to trade near $100 a barrel, reversing earlier losses. The move followed a nearly 10 percent slide over the previous two sessions on hopes for a diplomatic breakthrough. Meanwhile, U.S. gasoline prices at the pump climbed to an average of $4.54 a gallon, the highest since July 2022, according to AAA data.

The market remains on edge, balancing President Trump's optimistic statements that a deal is "very possible" against Iran's new assertion of control over the Strait of Hormuz. With Pakistan mediating, the next 24 hours are critical. A deal could see oil prices fall, while a breakdown in talks risks further military escalation and a sustained period of triple-digit oil prices.

Strait of Hormuz Remains Choke Point

The primary driver of market anxiety is the continued closure of the Strait of Hormuz. Iran has established a new "Persian Gulf Strait Authority" to vet and impose tolls on ships, according to shipping intelligence firm Lloyd's List, which stated that "as of right now the strait is closed." The blockade has trapped approximately 1,500 vessels and 20,000 crew members in the Persian Gulf, according to the U.N. International Maritime Organization.

A U.S. effort to escort vessels, "Project Freedom," was paused by President Trump after just one day following attacks by Iranian fast-attack boats, drones, and missiles on two U.S. Navy destroyers. The White House insists it has a plan to mitigate fuel price disruptions, including waiving the Jones Act to allow foreign vessels to transport fuel between U.S. ports.

Diplomatic Efforts on Multiple Fronts

Despite the tensions, diplomatic channels remain active. Pakistani officials, who are mediating talks, said they expect an agreement "sooner rather than later." However, Iran's Foreign Ministry has maintained that the latest U.S. proposal is "still under review."

The conflict's wider implications were also discussed at the Vatican, where U.S. Secretary of State Marco Rubio met with Pope Leo XIV. In a parallel diplomatic track, Israeli and Lebanese delegations are scheduled to resume U.S.-brokered talks in Washington next week, even as the border remains volatile. An Israeli airstrike on Wednesday killed senior Hezbollah commander Ahmed Ghaleb Balout in Beirut, which Iran's Foreign Ministry condemned. Israeli Prime Minister Benjamin Netanyahu warned that "no terrorist has immunity."

The U.S. continues to apply economic pressure, announcing new sanctions on an Iraqi deputy oil minister and other entities accused of helping Iran evade sanctions and finance militant groups.

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