US-Iran Conflict Sends Oil Prices Soaring Near $96 a Barrel
The global crude oil market is in turmoil as tensions between the US and Iran escalate in the Gulf. On Thursday, September 3, Brent crude traded at nearly $96 a barrel, just below its earlier high of $97 during the fighting. The WTI price also rose to around $91, a 9% increase over the past three trading sessions.
The conflict began when US Central Command carried out strikes against Iran's air-defence capabilities, which were retaliated by targeting US-linked positions across the Gulf. Iran accused an American strike of hitting a wedding celebration near the Strait of Hormuz, killing several people and citing it as justification for widening its retaliation.
The central worry for traders is not the exchange of fire itself but what it signals for tanker traffic through the Strait of Hormuz, which accounts for nearly a fifth of global oil flows. Even the threat of disruption tends to move prices more than any actual change in supply.
India, which imports most of its crude requirement, is particularly vulnerable to higher international prices. A sustained move higher in Brent creates a direct and immediate currency risk, as India's import bill and dollar demand increase. This compounds itself: higher crude raises India's dollar demand, a weaker rupee makes that same crude even costlier in rupee terms.
President Trump said he didn't expect the renewed strikes to continue 'too long', but markets remain uncertain about the future of the conflict. If this week's escalation proves to be contained, some of the fresh risk premium could unwind quickly as Hormuz traffic stabilises again.