Key Takeaways:
Gold prices are testing the $4,500 level and silver broke past $75 an ounce after Iran launched a series of attacks on commercial and military vessels in the Strait of Hormuz, dramatically escalating tensions despite a fragile ceasefire.
"Events in Hormuz make clear that there's no military solution to a political crisis," Iran's Foreign Minister Abbas Araghchi said in a social media post, while simultaneously warning that any vessel attempting to transit the waterway without permission "will be stopped with force," according to the Islamic Revolutionary Guard Corps.
The attacks on Monday prompted a sharp spike in energy prices, with Brent crude jumping $3.06 to $111.23 a barrel and West Texas Intermediate climbing $2.18 to $104.12. The strikes included firing missiles and drones at the United Arab Emirates, with the UAE Ministry of Defense reporting over a dozen missiles were launched. A South Korean-flagged cargo ship was also damaged by an external impact, according to officials in Seoul.
The escalation puts global energy security at risk, as roughly one-fifth of the world's oil passes through the strait. The price of gold is now trading just 5% below its all-time high set in March 2025, reflecting a broad flight to safety across markets. The next major signal for the market will be the Pentagon's briefing on the conflict scheduled for Tuesday.
In response to the attacks, the U.S. military initiated "Project Freedom," an operation to guide commercial ships safely through the waterway. U.S. Central Command (CENTCOM) confirmed that two American-flagged merchant vessels and two Navy destroyers, the USS Truxtun and USS Mason, successfully transited the strait on Monday.
President Donald Trump stated that U.S. forces destroyed seven Iranian small boats for interfering with the operation. "If, in any way, this Humanitarian process is interfered with, that interference will, unfortunately, have to be dealt with forcefully," Trump said in a statement. CENTCOM commander Adm. Brad Cooper confirmed that defensive measures successfully intercepted or deterred each incoming threat against the naval vessels.
The Iranian attacks drew immediate condemnation. Saudi Arabia's foreign ministry expressed "concern regarding the current military escalation" and called for de-escalation. Egypt and the Gulf Cooperation Council also condemned the targeting of a UAE tanker owned by the Abu Dhabi National Oil Company (ADNOC), which was attacked by two Iranian drones.
The disruption is impacting more than just oil, with the Gulf also being a key transit route for natural gas, diesel, and fertilizer products. "We're facing a reckoning coming up with summer driving, summer travel and much higher gasoline prices through the summer," Ed Hirs, an energy expert at the University of Houston, told WTAE. While U.S. Treasury Secretary Scott Bessent insisted the U.S. has "absolute control" of the strait, he acknowledged it may take "weeks or a month" for the free flow of ships to resume.
This article is for informational purposes only and does not constitute investment advice.
