Iran’s Hormuz Attacks Send Oil Past $110, Dollar Slumps as Markets Brace for War

Oil prices surged past $110 a barrel Friday as Iran escalated attacks on shipping in the Strait of Hormuz, rattling global markets and pushing the U.S. dollar to near a three-week low [264850][267644]. The developments mark a sharp escalation in tensions that have been building for days, with traders now weighing whether the conflict will spiral further or ease through diplomacy.

Brent crude, the international benchmark, touched $110 per barrel for the first time since May before settling 3.7% higher at $109.86 [264850]. U.S. benchmark West Texas Intermediate rose 3.5% to $101.41 [264850]. The surge followed Iran's Islamic Revolutionary Guard Corps (IRGC) reporting that two oil tankers caught fire after striking naval mines in the Strait of Hormuz — a narrow waterway through which roughly one-fifth of the world's oil passes [266543][264360].

The IRGC described the vessels as "violating," a term it uses for ships it considers to be acting against Iranian rules in the strategic waterway [266543]. No casualties were reported, and the IRGC did not immediately provide details on the ships, their crews, or the extent of damage [266543].

Attacks around Hormuz have intensified over the past ten days. Iran says it is responding to a U.S. blockade of its ports and tougher sanctions imposed last month [264850]. The threat has pushed transportation costs sharply higher, with shipping operators facing much higher insurance and security expenses [262641].

Despite the dangers, oil continues to flow through the strait. Operators appear willing to accept the risks because the route remains essential for global energy supplies [262641].

The conflict has rippled across financial markets. The U.S. dollar hovered near a three-week low on Wednesday as investors closely watched the Iran conflict, making currency markets cautious [267644]. The euro and Japanese yen traded in narrow ranges as traders waited for clearer signs of how the war would affect the global economy [267644].

European stock indexes opened mixed Monday in quiet trading, with investors staying cautious as oil prices held above $110 a barrel [267572]. High oil prices weigh on sentiment because they raise costs for companies and consumers [267572].

Markets briefly reversed course earlier in the week on hopes of U.S.-Iran diplomacy, with stock markets recovering and oil prices slipping [267562]. International oil prices fell sharply Tuesday, with Brent dropping 3% after earlier climbing toward $112 a barrel, as markets reacted to diplomatic developments between Washington and Tehran [266639].

Traders remain focused on whether the conflict will escalate or ease. Any major development could push the dollar, euro, or yen sharply in either direction [267644].

---