Kuwait activates air defenses as U.S.-Iran strikes

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Kuwait activates air defences

Highlights

The U.S. said it struck Iranian air defenses, a control station and two drones after Iran downed a U.S. drone.
Iran said it targeted a U.S.-used air base in retaliation, while Kuwait reported missile and drone attacks.
WTI crude rose 2.43% to $89.48, and Brent gained 1.85% to $92.82.
The Strait of Hormuz remains the key oil-market risk because it handles about one-fifth of global petroleum liquids consumption.

Gulf strikes raise market tension

According to Reuters, Kuwait said Monday that its air defenses were responding to “hostile missile and drone attacks.” A person familiar with the strikes said three ballistic missiles targeted the Ali Al-Salem air base in Kuwait and were intercepted.

The U.S. military said it struck Iranian air defenses, a ground-control station, and two drones over the weekend after what it described as “aggressive Iranian actions,” including the downing of a U.S. MQ-1 drone over international waters. U.S. Central Command said the Iranian drones had posed threats to ships moving through regional waters.

Iran’s Islamic Revolutionary Guard Corps said it retaliated by targeting an air base used by U.S. forces, without identifying the site.

Oil prices reflect Hormuz risk

Energy markets reacted quickly. West Texas Intermediate crude rose 2.43% to $89.48 a barrel, while Brent crude climbed 1.85% to $92.82, according to the latest market data. The gains followed renewed doubts over whether negotiations can produce a deal to reopen the Strait of Hormuz and reduce the risk premium in oil.

The strait remains central to the market response. In 2024, about 20 million barrels a day of oil flowed through Hormuz, equal to roughly 20% of global petroleum liquids consumption, according to the U.S. Energy Information Administration. Any prolonged disruption would affect crude exports from several Gulf producers and could feed directly into fuel prices, shipping costs, and inflation expectations.

Diplomacy continues under fire

The military exchange comes as Washington and Tehran continue trading proposals aimed at extending the cease-fire and finding a path toward reopening Gulf shipping lanes. President Donald Trump has said Iran must not obtain a nuclear weapon and has called for the immediate reopening of Hormuz, while Iranian officials have accused the U.S. of escalating the conflict through strikes on Iranian military infrastructure.

The latest attacks underscore the fragility of the diplomatic track. Even limited strikes risk triggering wider retaliation, especially when U.S.-linked bases in Gulf states are drawn into the exchange.

Energy markets face a narrow margin

The latest escalation matters because oil markets are already pricing in the possibility that diplomacy may not reopen Hormuz quickly.

With Brent near $93 and WTI above $89, each new attack near Gulf military or shipping infrastructure increases the risk of higher transport costs, tighter supply expectations, and renewed pressure on consumer fuel prices.

We have previously highlighted that oil climbs as the U.S. and Iran trade fire.

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