The retaliation traders were bracing for arrived overnight, and crude is moving fast. WTI surged 5.3% to $88.04 a barrel on Tuesday, a one-week high, while Brent climbed 4.7% to $92.40 after Iranian missiles and drones targeted bases housing American forces in Jordan and the UAE.
Two countries, eight interceptions
Iran's Revolutionary Guard said its overnight barrage was aimed at the King Hussein air base and the Al Azraq base in Jordan, and claimed heavy damage to aircraft positions and maintenance buildings. Jordan's military tells a different story: eight missiles crossed into its airspace, and all eight were shot down before doing any harm.
The UAE picture is murkier. Iranian missiles were reportedly aimed at American forces at an air base on Emirati soil, but the UAE defense ministry denied its Al Minhad base was struck, saying only that its air force handled a drone approaching over nearby waters.
Whatever the true damage, the act matters more than the scorecard. It is the first Iranian fire to cross borders in about a month, arriving two days after US forces struck rocket launchers on Larak Island that were being readied to mine the Strait of Hormuz.
The rally traders finally trusted
Monday told its own story about market nerves. Crude spiked more than 3% after the Larak Island strike, then gave the whole move back by settlement as traders questioned whether Tehran would actually answer. The overnight launches settled that question.
WTI ran from a session low of $84.11 to $88.04, and Brent touched $92.40, recovering most of the ground lost in the late-August slide that drained the market's fear premium.
The move was broad, too. Natural gas added 1.4% to $2.93 per million BTU, and the OPEC basket climbed almost 3% to $89.59.
What to watch
The next move belongs to Washington. A measured response could cap the rally, while strikes deeper into Iranian territory would likely add several more dollars of risk premium. Mining remains the market's single biggest fear: one confirmed mine in a shipping lane would send tanker insurance rates soaring and freeze traffic overnight.
For now, OPEC+ is staying put, with production quotas set to hold through year-end. Once again, the strait is the whole story.