US-Iran strikes enter third night as oil climbs 3% on Hormuz fears

The US and Iran traded a third consecutive night of strikes, pushing Brent crude above $78 and sending war risk premiums for Strait of Hormuz transit to multi-year highs.

The US military struck dozens of Iranian targets for a second straight night Sunday, extending a cycle of retaliation that pushed Brent crude 3.9% higher to $78.99 a barrel and froze commercial shipping decisions through the Strait of Hormuz.

"The oil market is pricing in a prolonged disruption, not a quick resolution," said Bob McNally, founder and president of Rapidan Energy Group. "President Trump's messaging has helped cap the rally so far, but each night of strikes raises the probability of a sustained blockade."

Brent crude rose 3.92% to $78.99 a barrel Sunday, while US crude climbed 3.44% to $73.87. The gains remain well below the $115 peak reached in April, reflecting what McNally called a "pretty tame" increase given the scale of the escalation. US gasoline averaged $3.87 a gallon, up 30% since the conflict began in late February. Dow Jones and S&P 500 futures slipped 0.2% each, while Nasdaq futures dropped 0.3%.

The Strait of Hormuz carries about one-fifth of the world's oil and liquefied natural gas. Lloyd's List Intelligence said war risk premiums are expected to increase sharply as shipowners and charterers have paused decisions to transit the waterway. Iran's Islamic Revolutionary Guard Corps claimed it closed the strait, while US Central Command insisted traffic was flowing — a contradiction that leaves the market guessing which side controls the world's most important energy chokepoint.

The US Central Command said it hit dozens of Iranian military targets including air defense systems, coastal radar sites, missile and drone capabilities, and small boats using fighter planes, naval vessels, and one-way attack sea drones for the first time. The strikes came after Iran's IRGC fired at another commercial vessel in the strait, according to Capt. Tim Hawkins, a CENTCOM spokesperson.

Iran retaliated by targeting US military facilities across the Gulf. The IRGC said it struck helicopter maintenance facilities and a drone command center at the US Air Base in Sheikh Isa, Bahrain, and targeted fuel storage tanks and Patriot air defense systems at Ali Al Salem Air Base in Kuwait. Sirens sounded in Bahrain, Kuwait said its air defense systems were intercepting "hostile aerial targets," and Jordan's military intercepted four missiles from within its airspace.

Strait of Hormuz becomes the flashpoint

The waterway has emerged as the central lever in the conflict. Iran's authority overseeing transit protocols said passage was "not possible," while President Donald Trump told CNN the strait was "open as far as we're concerned." Tracking data showed traffic reduced to a trickle Sunday as shipowners weighed the risk of strikes against the cost of delays.

Oman has drafted a proposal to manage traffic through two separately controlled routes, a source with knowledge of the talks told CNN. Pakistan, which mediated the June 18 memorandum of understanding between Washington and Tehran, urged all sides to exercise restraint and uphold commitments made under the agreement — a deal that now appears increasingly fragile.

The escalation carries direct consequences for US consumers. Gasoline prices, which averaged $4.56 on Memorial Day, have since declined as crude unwound some of its war gains, but the latest strikes threaten to reverse that trend. With congressional elections approaching in November, higher pump prices represent a politically sensitive risk for the Trump administration.

Iran's Foreign Ministry condemned the US attacks as war crimes, accusing Washington of violating international law and warning neighboring Gulf states against assisting US military operations. "Only 25 days after the signing of the agreement to end the war, the United States has openly violated nearly all parts of that agreement," the ministry said in a statement.

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