Oil surges 5.1pc to $93 as US strikes Iran for second night; stock futures slide

Oil surged 5.1 per cent to $93.15 a barrel and US stock futures fell on Tuesday night after the American military launched a fresh wave of strikes on Iran. It was the second consecutive night of attacks, putting a two-month ceasefire at risk of collapse and pushing the Strait of Hormuz back to the centre of the conflict’s economic fallout.

West Texas Intermediate crude for July delivery jumped $4.52 on the session. Brent crude, the international benchmark, pushed toward $94. The rally built on gains from earlier in the week, when oil prices had already risen on signs that ceasefire talks between Washington and Tehran were coming apart.

S&P 500 futures fell 0.3 per cent in late trading and Nasdaq 100 futures slid 0.5 per cent. The losses added to a technology-led selloff that has hit the year’s best-performing stocks. Taken together, rising energy costs and falling equity prices point to a market that is pricing in a prolonged Middle Eastern conflict with no clear exit.

President Donald Trump ordered the strikes after negotiations over Iran’s nuclear programme and the Hormuz blockade stalled. Speaking to reporters, Trump signalled further escalation was likely.

“We’re going to be attacking them, attacking them very hard.”

Trump said, Bloomberg reported.

Defence Secretary Pete Hegseth reinforced the administration’s position in a separate briefing.

“If we need to negotiate with bombs, we’ll negotiate with bombs.”

Hegseth said, Reuters reported.

The strikes came after Iran’s joint military command warned it would fire on any vessel attempting to transit the Strait of Hormuz, the narrow waterway that carries roughly a fifth of the world’s daily oil supply. Trump later claimed the US had secretly moved more than 100 million barrels of crude through the strait, describing the operation as “wildly successful,” CNBC reported. Ship transits through Hormuz remain well below normal levels. Iraq and the United Arab Emirates are racing to build alternative pipeline routes to bypass the chokepoint entirely.

Iran’s foreign ministry spokesperson Esmaeil Baghei condemned the strikes.

“This is not collateral damage — it is a calculated war crime and a flagrant violation of human rights.”

Baghei said, according to Reuters. The exchange of fire is the heaviest since the ceasefire was brokered in April.

The oil price surge adds to what was already a difficult inflation picture for the Federal Reserve. US consumer price inflation hit 4.2 per cent in May, a three-year high, driven in part by energy costs tied to the conflict. Core CPI, which strips out volatile food and energy prices, rose 0.2 per cent month over month, below the 0.3 per cent consensus. The softer reading was quickly overshadowed by the renewed oil spike.

New Fed Chair Kevin Warsh now faces a tightening dilemma. Bond traders maintained bets on a rate increase by December despite the soft core inflation print, a sign that sustained oil prices above $90 are expected to feed through to headline inflation in the months ahead.

“Rate cuts are off the table, and while there is chatter about a potential rate hike, we believe it’s unlikely that we’ll see one before the midterm elections.”

Skyler Weinand, chief investment officer at Regan Capital, told Bloomberg.

Chris Beauchamp, chief market analyst at IG, said investors were struggling to square the conflicting signals.

“Investors remain skittish despite being thrown a lifeline by the inflation figures. It is now a case of ‘once bitten, twice shy.’”

Technology shares took the heaviest blows in the equity selloff. Nvidia fell 3.7 per cent and Broadcom dropped 5.1 per cent on Tuesday, as investors continued rotating out of this year’s biggest winners. Super Micro Computer slid 28 per cent after announcing plans for a $7 billion equity raise, Bloomberg data showed. Oracle also fell on concerns about data centre capital expenditure.

Asian markets were poised to open lower, with futures pointing to declines in Tokyo, Hong Kong, and Sydney. Kuwait has begun offering crude to Asian refiners for the first time since the conflict started, Bloomberg reported earlier this week. Gulf producers are scrambling to fill the supply gap left by the Hormuz disruption.

Political pressure on Trump is mounting. Public polling shows the president’s approval ratings sinking as petrol prices stay elevated, and some Republicans have privately voiced concern about the war’s impact on the November midterm elections, Reuters reported.

Trump, however, appeared unfazed by the inflation data. “I love the inflation,” he told reporters earlier on Tuesday, suggesting that price pressures would ease once the conflict with Iran concluded, CNBC reported.

Monday marked 100 days since the US-Iran war began. Tuesday night’s strikes suggest the conflict is entering a more dangerous phase, with the Strait of Hormuz back at the centre of market attention and no diplomatic resolution in sight.