Trump threatens to bomb Iran as oil surges 4% on Hormuz fears

Trump threatened to bomb Iran's bridges, power plants and targets in Tehran if vessels in the Strait of Hormuz are attacked, an escalation that pushed Brent crude 3.75% to $94.42 a barrel on Wednesday.

"The disruptions facing the market don't end in the Middle East," ING commodities strategists Warren Patterson and Ewa Manthey wrote in a note. "In the Black Sea, Russia's CPC terminal has stopped receiving oil from Kazakhstan, with loadings suspended following ongoing attacks on tankers."

Brent jumped $3.41 to trade at $94.42, while West Texas Intermediate rose 3.69% to $87.45. The moves accelerated after Iran-aligned Houthi forces in Yemen declared a blockade on the Bab el-Mandeb Strait, prompting at least three Saudi oil tankers to reverse course in the Red Sea. The Strait of Hormuz, through which about 21% of global oil trade passes, has already seen zero ship transits, according to market data.

The dual threat to both Hormuz and Bab el-Mandeb — the world's fourth-largest oil route — risks severing Saudi Arabia's primary export pathways. Riyadh had diverted most crude shipments to its Red Sea port of Yanbu to bypass Hormuz, but the Houthi blockade now threatens that alternative. With Trump saying he has no interest in renewed negotiations, the market faces a supply disruption scenario not seen since the 1990 Gulf War.

Two Chokepoints, One Crisis

The Strait of Hormuz, a 21-mile-wide passage between Oman and Iran, handles about 21 million barrels of oil per day — roughly a fifth of global consumption. Its closure following Iranian threats has halted all tanker traffic, with no vessels transiting the waterway. The Bab el-Mandeb Strait, at the southern tip of the Red Sea, is the only maritime route connecting the Mediterranean and Suez Canal to the Indian Ocean. The Houthi blockade there threatens not just Saudi crude but all container shipping between Asia and Europe.

The Joint Maritime Information Center said in an advisory note that "sources close to the group stated that the Houthis have completed preparations to attack shipping, including the deployment of missiles and drones positioned near Bab el-Mandeb." Tanker tracking data shows at least three Saudi vessels made U-turns in the Red Sea on Tuesday after the Houthi declaration.

Supply Risks Beyond the Middle East

The supply shock is compounded by disruptions in the Black Sea, where Russia's CPC terminal has stopped receiving oil from Kazakhstan. The CPC pipeline, which carries about 1.2 million barrels per day from the Tengiz field to the port of Novorossiysk, suspended loadings after attacks on tankers in the region, ING said.

The simultaneous pressure on three major oil supply routes creates a risk premium that analysts expect to persist until a resolution emerges. The last time a comparable multi-chokepoint disruption occurred was during the 1990-91 Gulf War, when Iraq's invasion of Kuwait removed 4.3 million barrels per day from global markets and Brent doubled to $40. The current scenario, while different in structure, threatens a similar magnitude of supply loss.

Market Reaction Across Assets

The geopolitical shock triggered a broad risk-off move across financial markets. Gold rose as investors sought safe havens, while equity benchmarks in Asia and Europe declined. The S&P 500 energy sector rallied more than 2% on the oil price surge, while airline and transport stocks sold off on fuel cost concerns. The VIX, Wall Street's fear gauge, climbed as options traders priced in sustained volatility.

Brent crude options skew shifted sharply to the upside, reflecting market expectations that the disruption will last weeks rather than days. The premium for out-of-the-money call options on Brent exceeded levels seen during the 2022 Russia-Ukraine escalation, according to exchange data.

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