Widening Middle East conflict fuels oil rally

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Middle East conflict widens

Highlights

The U.S. launched new strikes inside Iran.
Fighting expanded across Iraq, Jordan, and Egypt.
Brent approached $89, while WTI traded above $85.

Reuters reported that U.S. Central Command confirmed strikes against Iran beginning at 8:00 p.m. ET on July 29, describing the operation as a response to Iranian attacks on U.S. forces stationed in the Middle East. The latest military action followed Iranian missile launches targeting U.S. bases in Jordan and increased activity by Tehran-backed groups across the region.

Conflict reaches new fronts

The latest escalation extended beyond Iran itself. Earlier on Wednesday, a U.S.-owned gas storage tanker caught fire at Egypt's Mediterranean port of Damietta after what maritime security firm Ambrey assessed as a drone strike. Egyptian authorities confirmed the fire but did not identify its cause.

At the same time, U.S. and Saudi forces carried out coordinated strikes against Iran-backed armed groups in eastern Iraq. Iraqi officials condemned the attacks as a violation of the country's sovereignty, while Iran-linked militias reported significant casualties.

The widening conflict has complicated Iraq's position as one of the few regional states maintaining close ties with both Washington and Tehran. Meanwhile, Jordan intercepted several Iranian missiles aimed at U.S. military installations, underscoring the growing geographic scope of the confrontation.

Oil markets react to escalation

Energy markets responded immediately as investors priced in the possibility of further disruptions to Middle East oil supplies. Brent crude climbed to about $89 per barrel, while WTI rose above $85, recovering sharply after losses earlier in the week.

The renewed advance reflects growing concern over security in the Strait of Hormuz, a critical shipping corridor for global crude exports. Iran said it had targeted vessels attempting to transit the waterway, while also rejecting an Omani proposal for joint management of the strait.

Although prices remain below the highs reached immediately after the conflict intensified, the latest gains highlight how quickly geopolitical developments continue to influence energy markets.

Markets watch for wider regional risks

The latest military exchanges increase the likelihood that additional regional actors could become directly involved, raising uncertainty for financial markets and global trade.

Beyond the humanitarian and security consequences, investors are closely monitoring energy infrastructure and maritime transport through the Persian Gulf. Any prolonged disruption to shipping or oil production could sustain upward pressure on crude prices, complicate inflation trends, and add another layer of uncertainty to the global economic outlook.

Earlier, we reported that Hormuz shipping slows as U.S.-Iran conflict widens.

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