Oil hits $100 per barrel as U.S. and Iran launch new attacks

Escalating Military Tensions Fuel Oil Price Surge

The price of Brent crude oil breached $100 per barrel for the first time since July 2026, driven by renewed clashes between U.S. and Iranian forces in the Persian Gulf. The surge came after the U.S. military confirmed destroying five Iranian oil tankers in response to alleged missile attacks on a U.S. warship, while Iran claimed to have targeted U.S. vessels and a military base in Jordan. The conflict, which has intensified since a June ceasefire collapsed, has reignited fears of supply disruptions and geopolitical instability.

Iran’s Islamic Revolutionary Guard Corps (IRGC) stated it attacked two U.S. warships, eight oil tankers, and 10 "non-compliant vessels" in the Persian Gulf, according to reports. The U.S. Central Command denied the claims, asserting that all Iranian attacks had failed and that 10 Iranian tankers had been destroyed "just in the last week." The IRGC also warned crews of vessels near Kuwait and Bahrain to evacuate, citing potential retaliation for U.S. strikes on Iranian tankers.

The U.S. action against Iranian tankers followed a series of attacks on its naval forces. On Tuesday, the military said it disabled five Iranian vessels in response to unsuccessful missile strikes on a U.S. warship. Iran retaliated by launching missiles at a U.S. military base in Jordan, which the Jordanian military intercepted without casualties. The attacks have further strained relations between the two nations, with Iran condemning U.S. strikes as a threat to regional security and the U.S. accusing Iran of destabilizing the Middle East.

Regional Conflicts Disrupt Oil Trade and Markets

The conflict has severely disrupted shipping in the Strait of Hormuz, a critical route for global oil trade. Before the latest escalation, about a fifth of the world’s oil passed through the strait, but traffic has since plummeted. The U.K. Maritime Trade Operations center reported that several merchant vessels in the Northern Arabian Gulf and Gulf of Oman were hit by "disabling fire" following Iranian attacks. The U.S. also cited a vessel listing near Port Rashid in the UAE, potentially due to an attack.

Iran-backed Houthi rebels in Yemen have further complicated the situation by attacking Saudi oil facilities. The Houthis accused Saudi Arabia of bombing a prison in Al-Hazm, killing inmates and civilians, while Saudi authorities reported Houthi attacks injuring 73 people and temporarily shutting oil sites. The fighting in Yemen has reignited, with the Houthis targeting territory near the Bab al-Mandab strait, a key transit route for Saudi oil after Iran effectively closed the Strait of Hormuz.

The turmoil has fueled speculation about the long-term impact on oil markets. Goldman Sachs analysts warned that continued attacks in the Persian Gulf and Red Sea could push Brent crude above $120 per barrel, a 20% increase from current levels. This would add to the surging fuel costs already affecting global economies, particularly in countries like Colombia, where higher oil prices could strain inflation and fiscal policies.

Economic Implications and Global Market Reactions

The oil price surge has sent ripples through global markets, with stocks and bond yields reacting to the heightened risk of energy-driven inflation. Global equities fell as Brent crude approached $100, while European and U.S. stock indexes saw modest declines. Analysts noted that $100 per barrel is a "psychological threshold" that could influence demand cycles, though significant price drops would likely require a major shift in the conflict.

Central banks face mounting pressure to address inflation as energy costs rise. In Colombia, where inflation reached 6.24% in August, higher oil prices could complicate efforts to stabilize the economy. The country’s central bank has maintained an interest rate of 12%, but prolonged price increases might force it to delay rate cuts or raise rates further. Similar concerns are growing in other regions, where energy costs are a key driver of inflationary pressures.

The U.S. government has also expressed concern over the impact on consumers, with gas prices hitting $4.22 per gallon—the highest since early June. President Donald Trump, though not currently in office, previously claimed that oil prices would drop sharply if the U.S. "wins" the conflict with Iran. However, recent developments show no signs of a resolution, with both sides continuing to escalate their actions.

Unresolved Tensions and Protests Over Regional Involvement

Protests have emerged in countries wary of being drawn into the conflict. Dozens of South Koreans demonstrated outside the U.S. embassy in Seoul, urging their government not to deploy troops to the Strait of Hormuz. The protesters argued that sending forces would risk lives and escalate the war, while South Korea’s defense authorities emphasized that any deployment would depend on ensuring military readiness. Iran has warned that South Korean involvement would be seen as "direct support for the party responsible for that aggression," signaling potential consequences.

The situation remains volatile, with both the U.S. and Iran showing little willingness to back down. The destruction of Iranian tankers and the targeting of U.S. military assets in Jordan highlight the cyclical nature of the conflict, which has already caused months of economic disruption. As oil prices climb and regional tensions persist, the path to de-escalation remains unclear, with markets and governments bracing for further uncertainty.

The next critical development will be the response from global markets and governments to the sustained oil price surge. Analysts are monitoring whether central banks will adjust interest rates or if further military actions will occur. With the Strait of Hormuz remaining a focal point of conflict, the next few weeks will determine whether tensions ease or escalate further, with profound implications for energy security and economic stability worldwide.