US Aggression against Iran Drives Oil Prices Higher, Drags Gold Lower

By Staff, Agencies 

Oil prices surged on Thursday after the United States launched a new wave of attacks against targets across Iran, prompting concerns over the security of energy supplies, as Tehran closed the Strait of Hormuz in response.

Brent crude climbed more than 2% to trade above $95 per barrel, while West Texas Intermediate rose to around $92 per barrel as markets reacted to the latest confrontation between Washington and Tehran and the growing uncertainty surrounding the Strait of Hormuz, The Straits Times reported.

The sharp increase in oil prices followed overnight US strikes on multiple locations inside Iran, marking the latest phase of a pressure campaign that Tehran has condemned as a violation of its sovereignty and an attempt to impose political demands through force.

US President Donald Trump had warned hours earlier that further military action could follow if a political agreement was not reached.

US War Secretary Pete Hegseth openly linked military force to negotiations during a press briefing on Wednesday.

"If we need to negotiate with bombs, we'll negotiate with bombs," Hegseth said.

US Central Command later stated that the attacks targeted "Iranian military surveillance capabilities, communication systems, and air defense sites across Iran."

Iranian officials have consistently maintained that negotiations conducted under military threats are illegitimate and that attempts to impose terms through force will only deepen instability across the region.

Following the attacks, Iranian military authorities announced the closure of the Strait of Hormuz to shipping traffic, while Iranian media reported that the Islamic Revolution Guards Navy struck two vessels described as "violating ships".

US Central Command disputed those reports and denied that the strategic waterway had been closed.

Iranian state media also reported that Iranian forces targeted 18 US military positions and launched strikes against the headquarters of the US Fifth Fleet in Bahrain. Bahraini authorities confirmed that warning sirens had sounded across parts of the country and urged residents to seek shelter.

The escalation also reverberated across financial markets. Despite the geopolitical tensions, gold struggled to gain momentum.

Spot gold traded near $4,077 per ounce after briefly falling to its lowest level since November, while US gold futures moved lower.

"Bearish momentum had taken hold of gold, and traders are simply derisking at this point. But with prices hurtling towards $4,000, it's an obvious level of support that could prompt bears to book a quick profit or tempt battered bulls from the sideline," Matt Simpson, a senior analyst at StoneX, told Reuters.

Simpson added that investors remain focused on upcoming US economic data.

"The US dollar index failed to gain much ground following Wednesday's CPI report. So, unless there are any nasty surprises in PPI - gold could be due a technical bounce over the near term."

Recent data showed that US consumer inflation accelerated in May, driven partly by rising energy prices linked to the war.

Markets are now awaiting the release of US Producer Price Index figures for further insight into the Federal Reserve's policy outlook. Traders increasingly expect that persistent inflationary pressures could force the central bank to consider additional interest-rate hikes later this year.

Meanwhile, the US Energy Information Administration reported another decline in domestic crude inventories, adding further upward pressure to oil prices as markets weighed the risks of a prolonged confrontation and the absence of any meaningful diplomatic breakthrough.