What Happened
U.S. forces struck an island in the Strait of Hormuz on Sunday, prompting Iranian retaliation with attacks on the United Arab Emirates and Jordan, according to Bloomberg. The exchange marked the first direct military confrontation between the two nations in roughly a month, breaking a period of relative calm that had shifted the standoff toward economic measures.
Brent crude futures topped $91 per barrel in Asian morning trade on Tuesday, according to Reuters, while West Texas Intermediate settled above $86. In the previous session, Brent closed up 2.7 percent and WTI gained 2.8 percent, according to CNBC, with both benchmarks reaching their highest levels since late August. President Donald Trump threatened further strikes against Iran following the weekend hostilities, according to CNBC and Reuters, raising the prospect of additional Iranian retaliation and potential damage to energy infrastructure around the Persian Gulf.
The Wall Street Journal reported that the renewed fighting has deepened supply risks through the Strait of Hormuz just as concerns are mounting elsewhere in global energy markets. Energy equities rallied sharply, with the State Street Energy Select Sector SPDR ETF hitting an all-time intraday high dating to its 1998 inception, according to CNBC, while individual energy stocks including Phillips 66, Marathon Petroleum, and Valero Energy reached fresh 52-week highs.
