Oil Jumps 9% as US-Iran Strikes Widen, Europe’s Winter Gas Bet Hangs by a Thread
Oil prices have surged more than 9% this week following the first direct military exchanges between Washington and Tehran since July, with fresh missile and drone strikes now drawing Kuwait directly into the crossfire [234307][234309]. The escalation is rattling global markets, pushing mortgage rates up sharply and clouding the outlook for reopening the Strait of Hormuz, a passage for roughly one-fifth of the world’s oil [229660][234358][233147].
The latest attacks mark a significant widening of the conflict. Kuwait’s army confirmed on Thursday it is actively confronting hostile missile and drone strikes launched from Iran, a move analysts say is a calculated shift to disrupt allied coordination [234309]. The strikes come as the U.S. Navy enforces a blockade that has sharply reduced Iran’s oil exports, part of Washington’s pivot from military action to economic warfare after a dozen waves of airstrikes in July failed to force Tehran to abandon its claim to the waterway [229660].
However, experts warn that the combination of sanctions and military force may be undercutting Washington’s own goals. Col. Steve Ganyard, a former Marine Corps pilot and ABC News contributor, said the strikes are raising tensions even as the White House tries to pressure Tehran back to the negotiating table [234278]. “Pressure can create leverage,” he said, “but if the other side feels cornered, it often digs in deeper” [234278]. A leading foreign policy expert echoed that view, arguing the strikes have unified Iran’s leadership and public opinion rather than triggering the internal revolt Washington had hoped for [231473].
The market is pricing in a longer period of disruption, with no immediate talks announced and traders focused on supply risks [233147]. The threat of continued conflict is enough to keep crude prices elevated even without new supply shortages being reported [234307]. That volatility is now spilling into consumer costs. Mortgage and refinance rates climbed sharply on Wednesday, rising more than ten basis points in a single day, as investors moved money into safer assets and bond yields spiked [234358].
Europe is feeling the strain most acutely. Officials have deliberately delayed purchasing new natural gas supplies for the coming winter, betting that the war in Iran will end soon and drive prices down [234391]. That strategy leaves the region vulnerable—if the conflict drags on or a harsh winter hits early, European nations could face severe shortages and soaring energy costs [234391]. The window for a negotiated settlement appears to be narrowing as both sides harden their positions [231865]. What is certain is that the cost of failure—militarily, economically, and diplomatically—continues to climb [234278].