Oil prices rise after US, Iran exchange fire at Strait of Hormuz

Global oil prices climbed on Friday morning after US and Iranian forces exchanged fire at the Strait of Hormuz, the first such flare-up since the ceasefire announcement on 7 April.

At 7:50 am, the July Brent contract on the Intercontinental Exchange was trading at $101.58 per barrel, up 1.52% from its previous close. The June West Texas Intermediate (WTI) contract on NYMEX rose 1.95% to $96.66 a barrel.

The fresh skirmish occurred at the Strait of Hormuz on Thursday.

Naval exchange

According to an Al Jazeera report, a spokesperson for Iran’s Khatam al-Anbiya military headquarters said the US targeted two Iranian vessels — an oil tanker travelling in coastal waters from Jask port in Iran towards the Strait of Hormuz and another vessel located near the UAE’s Fujairah port.

Meanwhile, US Central Command (CENTCOM) said in a statement:

"US forces intercepted unprovoked Iranian attacks and responded with self-defense strikes as U.S. Navy guided-missile destroyers transited the Strait of Hormuz to the Gulf of Oman, May 7. Iranian forces launched multiple missiles, drones and small boats as USS Truxtun (DDG 103), USS Rafael Peralta (DDG 115), and USS Mason (DDG 87) transited the international sea passage. No U.S. assets were struck."

While stating that CENTCOM does not seek escalation, the statement added that it remains positioned and ready to protect American forces.

Blasts reported

There have also been reports of explosions in civilian areas, including Tehran, after a relatively calm ceasefire period. State news agency IRNA reported two blasts in the Iranian capital.

US president Donald Trump claimed that three US destroyers successfully navigated the Strait of Hormuz despite coming under fire. While asserting that the American vessels sustained no damage, he said they inflicted “great damage” on Iranian forces.

In a post on Truth Social, he said:

"Three World Class American Destroyers just transited, very successfully, out of the Strait of Hormuz, under fire. There was no damage done to the three Destroyers, but great damage done to the Iranian attackers. They were completely destroyed along with numerous small boats, which are being used to take the place of their fully decapitated Navy. These boats went to the bottom of the Sea, quickly and efficiently. Missiles were shot at our Destroyers, and were easily knocked down."

"A normal Country would have allowed these Destroyers to pass, but Iran is not a normal Country. They are led by LUNATICS, and if they had the chance to use a Nuclear Weapon, they would do it, without question — But they’ll never have that opportunity and, just like we knocked them out again today, we’ll knock them out a lot harder, and a lot more violently, in the future, if they don’t get their Deal signed, FAST! Our three Destroyers, with their wonderful Crews, will now rejoin our Naval Blockade, which is truly a 'Wall of Steel.'"

However, speaking to ABC News later on Thursday, Trump said that the ceasefire remains in effect.

India on alert

For India, any disruption in the Strait of Hormuz carries immediate economic risks. The country imports nearly 90% of its crude oil requirements, and a sustained spike in global prices can widen the trade deficit and strain public finances.

A $1 per barrel increase in crude prices raises India’s import bill by roughly ₹16,000 crore annually, according to industry estimates. Higher crude prices also translate into elevated LPG and fuel costs.

With the Strait handling a significant share of global oil shipments, renewed tensions could complicate supplies from key West Asian producers.