U.S. Bombings on Iran Nuclear Sites Raise Oil Market Volatility, Strait of Hormuz Risks

Following President Trump's authorization of U.S. airstrikes targeting Iran's nuclear facilities, oil markets have experienced significant volatility amid heightened geopolitical tensions. Iran responded by threatening to close the Strait of Hormuz, a critical chokepoint for global oil and LNG shipments, though analysts note that such a closure would also harm Iran's own economic interests. Despite initial spikes pushing Brent crude to a five-month high above $81, prices have since retraced, trading within a range as markets weigh the risks of further escalation against hopes for de-escalation. Traders remain cautious, monitoring Iran's next moves, which could include direct military action, proxy attacks, or asymmetric disruptions to oil infrastructure without a full shutdown of the strait. The current oil price dynamics are largely driven by geopolitical risk premiums, as fundamental supply and demand factors are less influential due to rising OPEC+ output and weakening demand growth. Overall, the market outlook remains uncertain, with the potential for sharp price swings depending on developments in the Iran-U.S.-Israel conflict and the stability of transit through the Strait of Hormuz.