Oil Rises as Growing U.S.-Iran Hostilities Spur Prospects of Prolonged Supply Disruptions — Update

By Ronnie Harui

Oil rose as growing U.S.-Iran hostilities spurred prospects of prolonged supply disruptions in the Middle East, while most Asian government bonds fell as the rise in crude prices invoked fears of higher inflation and tighter monetary policy.

The U.S. and Iran exchanged fire Tuesday as they continued to fight for control of the Strait of Hormuz, a key waterway through which one-fifth of the world's oil is transported.

President Trump said the U.S. strikes were launched in retaliation against Iran's attempt to place mines in the strait and target American servicemembers in the Middle East over the weekend. Iran responded by firing missiles and drones across the Persian Gulf.

Trump later said on Truth Social that he isn't trying to force Iran to the bargaining table, and that he couldn't care less if Tehran signs an agreement to reopen the Strait of Hormuz. Trump said that he likes the U.S.'s position now much better, with near-total control of the strait and Iran's economy collapsing.

Jordan, which hosts U.S. servicemembers in bases across the country, reported engaging 13 ballistic missiles that entered its airspace, The Wall Street Journal reported, citing Jordan's armed forces. Kuwait and Bahrain also reported taking hostile fire.

"The main theme was the sharp escalation in the U.S.-Iran conflict, which sent oil prices surging and intensified the selloff in global bonds and equities," Commerzbank Research analysts said in a report.

"The renewed escalation raises the risk of a more prolonged disruption to energy flows through the Strait of Hormuz and has effectively reversed the tentative improvement in sentiment toward the conflict seen in recent weeks," the analysts added.

Front-month West Texas Intermediate crude oil futures rose 0.4% to $90.58 a barrel on Wednesday after breaking past $90.00 on Tuesday for the first time since late May, ICE data showed. Front-month Brent crude oil futures climbed 0.7% to $95.31 a barrel.

The yield on Japan's 10-year government bond rose 2 basis points to 3.010% after earlier touching a fresh three-decade high of 3.015%. The yield on Australia's 10-year sovereign securities was up 3 basis points at 5.1830% after reaching 5.2229%, the highest intraday level since July 2011, FactSet data showed. Meanwhile, the yield on New Zealand's 10-year government debt reversed gains, falling 2 basis points to 4.7800%. Bond yields move inversely to prices.

Global bond yields have surged as the "energy shock reinforced already-elevated inflation concerns" following Federal Reserve Chairman Kevin Warsh's hawkish remarks at the Jackson Hole economic policy symposium on Friday, UOB's global economics and markets research team said, noting the recent climb in crude oil prices.

Equity markets across the Asia-Pacific region were mostly lower. South Korea's Kospi fell 3.7%, Japan's Nikkei Stock Average dropped 2.9%, and Hong Kong's Hang Seng Index shed 1.0%. China's Shanghai Composite lost 0.8% and Taiwan's Taiex declined 1.5%. Meanwhile, Malaysia's FTSE Bursa Malaysia KLCI edged 0.1% higher and Singapore's FTSE Straits Times Index was little changed.

Write to Ronnie Harui at ronnie.harui@wsj.com

(END) Dow Jones Newswires

September 02, 2026 01:10 ET (05:10 GMT)