Oil trims gains as traders weigh fallout from US strikes on Iran

Oil erased gains as traders weighed the outlook for peace talks over the Iran war after a brief US military campaign against the Islamic Republic following the downing of an American helicopter.

Brent crude slipped to trade near $91 a barrel after climbing as much as 2% earlier in the session. West Texas Intermediate was around $88. US forces attacked sites near the Strait of Hormuz, while Iran launched a drone strike on the US Fifth Fleet in Bahrain in response, state-run IRIB reported, along with attacks on American military facilities in Jordan and Kuwait.

The “self-defense strikes” on Iran were conducted under President Donald Trump’s direction in response to an Apache helicopter being shot down off Oman, US Central Command said in a statement on X. “The mission is a proportional response to unjustified Iranian aggression.”

Centcom said US forces “struck Iranian air defense, ground control stations, and surveillance radar sites near the Strait of Hormuz with precision munitions” from fighter jets. IRIB reported that Qeshm Island in the strait was attacked, along with the Jask region near the narrow waterway.

Trump earlier blamed Tehran for the attack on the helicopter, which he said was patrolling over the strait, vowing a response. Iranian Foreign Minister Abbas Araghchi said on X that the Islamic Republic would leave no attack or threat unanswered following the US strikes.

The fresh hostilities imperil the stability of a shaky ceasefire in the region and negotiations for a more lasting accord between the warring parties. Trump has repeatedly said that peace talks are on track, after a flare-up earlier in the week saw Israel and Iran exchange attacks.

The strikes “further highlight how any Iran deal is still out of reach,” said Saul Kavonic, senior energy analyst at MST Marquee. “But the market is taking some comfort from the strikes remaining proportional, rather than an all out assault, which suggests appetite to prefer a deal over war remains.”

The latest round of hostilities risks prolonging the near-total closure of the critical Strait of Hormuz, which is subject to a double blockade by the US and Iran. The war, which started in late February, has choked off supplies of crude, fuels and natural gas, and raised concerns about an inflation crisis.

US crude inventories fell 9.1 million barrels last week, according to an American Petroleum Institute report seen by Bloomberg, which would be the biggest draw since September if confirmed by government data Wednesday. The nation’s stockpiles are already at the lowest in four months, reflecting the drawdown in global supplies as buyers try to replace barrels lost from the Persian Gulf.

“Every day that passes tightens the market as global oil storage drops into unprecedented low levels,” said MST Marquee’s Kavonic.

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