NEW YORK: Brent crude rallied toward $100 a barrel on Wednesday as escalating attacks between Iran and the United States disrupted one of the world’s most critical oil corridors, keeping Asian stock markets subdued and heightening inflation concerns before the release of closely watched U.S. consumer price data.
Brent crude futures rose $1.57 to $99.49 a barrel, their highest level since late June. U.S. West Texas Intermediate crude gained $1.60 to $94.63 a barrel. Oil prices jumped for a fourth straight session, gaining more than $1 in early trade.
The surge came as Iran’s Islamic Revolutionary Guards Corps said Wednesday it struck two American vessels and eight oil tankers in the Gulf, retaliating against U.S. forces that destroyed five Iranian crude oil carriers a day earlier. The U.S. military said it hit four tankers in the Gulf of Oman, the M/T Kaviz, M/T Charminar, M/T Horizon 1 and M/T Riesco, and a fifth, the M/T Derya, near Iran’s Kharg Island.
“American forces directed the crews to abandon ship before the vessels were struck and rendered inoperable,” U.S. Central Command said in a statement.
The IRGC said the targeted vessels had attempted to cross an area of the Hormuz Strait it had designated “forbidden and unsafe,” according to a statement published by semi-official Tasnim News Agency. The U.S. warship successfully evaded Iranian attack and no American personnel were harmed, Centcom said.
The hostilities come as the Trump administration shifts its strategy toward defeating Tehran economically. Iran’s Foreign Minister Abbas Araghchi dismissed the U.S. sanctions on X late Tuesday as a rehash of a failed strategy. “After failing to achieve its aims through sanctions or war, Washington’s ‘novel’ solution is…more sanctions. Seriously?”
Houthis Expand Attacks on Saudi Arabia
The conflict widened Tuesday when Iranian-backed Houthis in Yemen launched strikes on several Saudi cities, wounding 73 people and setting oil installations ablaze. The Houthis attacked four cities in southern Saudi Arabia, Khamis Mushait, Abha, Najran and Jazan, striking a Saudi airbase and state oil company assets.
NASA satellite images showed a thick cloud of black smoke over the Jazan refinery and a column of white smoke rising from an oil distribution center in Abha. Saudi authorities said women and children were among the wounded, suggesting the attacks were among the largest carried out against Saudi Arabia since the U.S. and Israel launched their war against Iran in February.
Iran then retaliated with a ballistic missile attack on a U.S. base near Al Azraq town in eastern Jordan, according to an IRGC statement carried on state media. There was no immediate confirmation from Jordan or the U.S. military.
Markets React with Caution
In Asian trading, stocks in Sydney slipped about 0.3%, while Hong Kong’s Hang Seng Index dropped 0.6%. Mainland Chinese blue chips edged up 0.2%. A rebound in chip and artificial intelligence stocks helped some regional benchmarks, with Japan’s Nikkei up 0.6% following Tuesday’s 1.7% tumble. South Korea’s KOSPI jumped 1.6% and Taiwan’s TAIEX rose 0.6%.
Overnight, the Philadelphia Semiconductor Index jumped 1.3% despite declines on Wall Street’s three main indexes. U.S. S&P 500 futures added 0.1% after the cash index sank 0.6% on Tuesday.
“Across several of the major macro markets, we see indecision in the price action, tight ranges and a general holding/consolidation pattern,” Chris Weston, head of research at Pepperstone, wrote in a client note. Brent crude is currently “one of the clearest real-time signals for sentiment” for the overall market, and $100 “now feels like a highly achievable level,” he said.
Inflation worries have weighed on global equities in recent weeks and lifted bond yields as traders price in higher odds of central bank tightening.
Yen Strengthens on Rate-Hike Expectations
The yen strengthened toward the nearly seven-month high it touched against the dollar on Tuesday as traders exited short positions amid expectations of faster Bank of Japan interest rate hikes and a potential rush of repatriation of Japanese capital.
The euro edged higher ahead of the European Central Bank’s policy decision on Thursday, with markets widely expecting a rate hike amid inflationary pressures stemming from the conflict.
U.S. Downplays Captured Drone
Separately, Centcom said an unmanned submersible that Iran reportedly seized in the Strait of Hormuz was “defective” and carried no sensitive data or classified equipment. Iranian media described the sub as a Dive-LD, an autonomous undersea vehicle developed by U.S. defense contractor Anduril.
“The defective drone was an older model that neither collected sensitive data nor carried any classified sonar or radar equipment,” U.S. Navy Captain Tim Hawkins told CNBC in a statement shared by Centcom.
An Anduril spokesperson said the Dive-LD is “an attritable autonomous system, meaning it is designed from the outset to operate in dangerous environments where loss of the vehicle is an expected possibility,” adding that the vehicle had “already delivered significant value operating thousands of hours in months-long operations in CENTCOM.”
The episode highlights the U.S. military’s increasing dependence on autonomous technology to fight the war in the Middle East. This summer, unmanned boat startup Saronic used one of its drone vessels to rescue crew from a helicopter downed in the Hormuz Strait, and its boats were later used in a strike on an Iranian submarine and ship facility.
The war has been marked by a cycle of pauses followed by periodic flare-ups, with Iran still able to launch missile and drone strikes on its neighbors and threaten oil shipping in the Strait of Hormuz despite U.S. attacks that have degraded much of its conventional forces and extracted a toll on its already ailing economy.
