Oil rises, futures slip as U.S. and Iran trade 3rd strike round

The U.S. and Iran exchanged a third round of military strikes over the weekend, closing the Strait of Hormuz and sending oil prices higher.

The U.S. military struck about 140 Iranian targets Sunday after Iran closed the Strait of Hormuz and hit a container ship, pushing crude prices higher and dragging equity futures lower as traders priced in renewed supply disruption risk.

"Iran made a poor choice. Now they pay," Defense Secretary Pete Hegseth said on social media, as U.S. Central Command confirmed the third round of strikes this week.

Iran's Islamic Revolutionary Guard Corps fired a warning shot at a Cyprus-flagged container ship transiting the strait, causing significant engineroom damage and leaving one crew member missing, according to CENTCOM. Tehran declared the waterway closed "until further notice" and struck a second vessel. The IRGC also launched retaliatory strikes on Prince Hassan Air Base in Jordan and targeted sites in Qatar, Kuwait, Bahrain and Oman.

The Strait of Hormuz handled about a fifth of the world's traded oil and natural gas before the war began. Iran's grip on the waterway during the conflict triggered a global energy crisis, and while crude prices have since fallen from wartime highs of $120 a barrel, the renewed closure threatens to reverse those gains. The average U.S. gasoline price stands at $3.88 a gallon, about 70 cents higher than a year ago.

Oman drafted a tentative proposal to manage traffic through two separately controlled routes — a southern corridor through Omani waters allowing free navigation and a northern corridor through Iranian waters requiring prior approval — but the deal remains unratified. Iranian Foreign Minister Abbas Araghchi met with his Omani counterpart in Muscat on Saturday to discuss the proposal, agreeing to further technical and political talks.

The escalation deals a fresh blow to the interim ceasefire agreement reached last month between Washington and Tehran. Senior U.S. officials had said negotiations to cement the deal could not progress without the strait being secure. President Donald Trump declared the ceasefire "over" but said the U.S. would continue negotiations.

The last time Iran closed the strait during the opening weeks of the war in February, crude prices surged past $120 a barrel within five trading sessions, the S&P 500 fell 8% over two weeks, and the VIX spiked above 35, according to exchange data. The current options skew suggests traders are pricing in a similar — though less severe — risk premium this time.

Iran's new Supreme Leader Mojtaba Khamenei, still unseen publicly since his father's killing in the war's opening strikes, vowed in his first statement that "revenge is the demand of our nation and must certainly be carried out." Trump responded by threatening to "decimate" Iran if its leadership attempted to assassinate him, saying 1,000 missiles are "locked and loaded."

For investors, the key question is duration. If the strait closure persists beyond two weeks, oil inventories could draw down rapidly, forcing a reassessment of Federal Reserve rate path expectations as inflation risks resurface. Energy stocks may rally, but transport, consumer discretionary and emerging-market equities face headwinds from higher fuel costs and supply chain disruption.

This article is for informational purposes only and does not constitute investment advice.