Oil prices gain on renewed US-Iran hostilities

NEW DELHI - Oil prices rose on Friday after renewed fighting broke out between the United States and Iran, threatening a shaky ceasefire and dashing hopes for progress to reopen the Strait of Hormuz, a key transit route for oil and liquefied natural gas.

Brent crude futures were up 67 cents, or 0.67%, at $100.73 a barrel by 0650 GMT. West Texas Intermediate (WTI) U.S. crude futures rose by 45 cents, or 0.47%, to $95.26 a barrel. The benchmarks were up more than 3% at the market open.

The gains snapped three days of decline on reports this week that the U.S. and Iran were close to agreeing to a peace deal that would end the fighting but put off larger issues around Iran's nuclear programme.

For the week, both contracts are still set to fall about 6%.

"The market is on the cusp of a complete breakdown," said Vandana Hari, founder of oil market analysis provider Vanda Insights.

"Price formation is no longer anchored in a pragmatic reading of the war's trajectory or the physical realities in the Strait of Hormuz."

Friday's jump in prices followed Iran's accusations that the U.S. violated their month-long ceasefire, while the U.S. said its strikes were retaliatory after Iran fired on U.S. Navy vessels transiting the Strait of Hormuz on Thursday.

Iran's military said the U.S. had targeted an Iranian oil tanker and another ship, as well as civilian areas in the Strait and on the mainland.

Despite the renewed combat, U.S. President Donald Trump told reporters later on Thursday the ceasefire was still in effect.

"The U.S. administration continues to oversell the prospects of a thaw, and an optimism-biased market buys into it," Vanda Insights' Hari said.

"Curiously, each time, the rebound is gradual and incomplete, making the head fakes at least somewhat effective."

The exchange of fire happened as Washington awaited Iran's response to the latest peace proposal, which did not tackle contentious issues such as the U.S. demand to reopen the Strait of Hormuz, a conduit for a fifth of the world's oil and LNG supplies before the war began on February 28.

"On the supply front, the picture remains tight," IG analyst Tony Sycamore said in a note.

The U.S. Commodity Futures Trading Commission is investigating oil price trades totalling $7 billion ahead of key Iran war-related announcements by Trump, Reuters reported on Thursday.

Most of the trades involved short positions, or bets on prices falling, placed on the Intercontinental Exchange (ICE) and Chicago Mercantile Exchange (CME) before Trump statements announcing attack delays, the ceasefire or other changes to Iran policy that led to a decline in oil markets.

(Reporting by Mohi Narayan in New Delhi and Colleen Howe in Beijing; Editing by Christian Schmollinger, Tom Hogue and Clarence Fernandez)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published May 8, 2026 at 12:10 AM.