Bushehr blasts near Iran nuclear plant send Brent above $74

Explosions near Iran's Bushehr nuclear plant sent Brent crude above $74 a barrel Wednesday, as the US and Iran traded fresh strikes that deepened the crisis over the Strait of Hormuz, through which roughly one-fifth of the world's oil supply passes.

"The US response was absolutely necessary because when you have a ceasefire and Iran is basically violating it, it is totally crucial that the US forcefully react," NATO Secretary General Mark Rutte said at a summit in Ankara on Wednesday.

Brent rose 3% to $74.16 a barrel, while WTI gained 2.8% to $72.43 and Murban crude climbed 3.4% to $68.97. The US Treasury revoked a temporary sanctions waiver that had allowed Iran to export crude through Aug. 21, and US Central Command said it struck more than 80 Iranian targets with precision munitions, including air defense systems, coastal radar sites, anti-ship missile capabilities and more than 60 Islamic Revolutionary Guard Corps small boats.

The escalation threatens to disrupt the Strait of Hormuz, a chokepoint for about 20% of global oil consumption. Iran's Khatam al-Anbiya Central Headquarters warned it would deliver a "crushing response" and insisted commercial vessels use routes designated by Tehran, a sign that the fragile ceasefire reached last month is effectively dead.

Oil Markets Price In Supply Risk

The spike in crude prices reflected mounting concern that the military exchange could spill further into the strait. Iran's IRGC claimed it struck 85 US military installations in Bahrain and Kuwait, including the US Fifth Fleet base in Bahrain and Ali Al Salem Air Base in Kuwait, in what it called an "initial response" to US strikes on Hormozgan and Mahshahr. Iran's army separately said it launched drone strikes targeting US forces at Bahrain's Sheikh Isa Air Base, warning that "all US bases in the region will be legitimate targets."

The last time the US struck Iranian territory directly was in late June, when a similar exchange over commercial shipping attacks pushed Brent above $72 before a ceasefire was reached. That truce lasted less than two weeks. Bond markets also reacted to the renewed tensions, with 10-year US Treasury futures falling seven ticks as traders priced in the possibility that higher energy costs could fuel inflation and keep interest rates elevated.

Nuclear Shadow Over Energy Markets

Bushehr, the site of Iran's sole nuclear power plant, has not been confirmed as a direct target of US strikes. Iranian media reported multiple explosions in and around the city, with state broadcaster IRIB saying several people were wounded by shrapnel from an "enemy projectile" that struck a commercial dock in the southern port of Sirik. The proximity of the blasts to nuclear infrastructure adds a new dimension of risk that energy traders are now pricing in.

Iran's top negotiator Mohammad Bagher Ghalibaf accused the US of "major violations" of the memorandum of understanding between the two countries. "The era of bullying and extortion is over. It leads nowhere. We don't fold," he wrote on X.

The US has not reimposed its naval blockade of Iran, but the revocation of the oil sanctions waiver effectively restores the full pressure campaign that was partially lifted under the June ceasefire. With Khamenei's funeral procession underway in Najaf, Iraq, and his burial scheduled for July 9 in Mashhad, diplomatic channels remain frozen. The US has said it is prepared to strike again if Iran does not adhere to the agreement, while Tehran has warned of further retaliation, setting the stage for a prolonged confrontation that could keep oil prices elevated.

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