Global oil prices settle above $90 a barrel after U.S. and Iran exchange fire for first time in a month

By Isabel Wang and Steve Goldstein

Every extra dollar in oil prices now lands in a market that has suddenly rediscovered the possibility of another interest-rate hike

The latest leg higher in oil prices on Monday comes after global crude futures fell by over 5% last week, following talks between Iran and Oman about reopening the Strait of Hormuz.

Oil prices ended sharply higher on Monday after the U.S. and Iran exchanged fire for the first time in a month amid renewed hostilities, as the Middle East conflict stretches into its seventh month.

The global benchmark Brent crude-oil contract for November delivery (BRN00) (BRNX26) rose 1.3% to $90.49 per barrel, settling at its highest level in a week, according to FactSet data. West Texas Intermediate crude for October delivery (CL00) (CLV26), the U.S. benchmark, was up 2.8% to $85.76, logging its biggest one-day gain since early August.

The uptick in oil prices on Monday also brought Brent crude futures up 0.4% in August, while WTI futures tacked on 1.3% monthly gains, according to FactSet data.

President Donald Trump on Monday said the U.S. would respond to an Iranian missile attack on U.S. forces overnight. "We're going to hit them hard," the president told Fox News. "There will be a response."

The U.S. and Iran over the weekend exchanged fire for the first time in over a month after American forces attacked two rocket launchers on a key island in the Strait of Hormuz. Iran retaliated by launching missiles at a U.S. base in Jordan.

The latest developments turn what initially looked like another limited enforcement strike into a fresh reminder that this conflict "still has plenty of dry tinder lying around," said Stephen Innes, managing partner at SPI Asset Management.

Treasury Secretary Scott Bessent said Monday that Iran is responding with military aggression because U.S. sanctions are inflicting economic pain on the regime. "I would think that they are lashing out kinetically because they are losing economically," he told reporters at a meeting of G-20 finance ministers and central-bank governors in North Carolina.

Bessent last week announced the launch of "Operation Economic Outcast," which he also billed as "an economic D-Day" for Iran, featuring new sanctions for about 60 Tehran-linked entities.

"The timing could hardly be worse for markets, as Brent is back near $90 [per barrel] on the same morning [Federal Reserve Chairman] Kevin Warsh's Jackson Hole message is still rattling around the bond market," Innes wrote in a Monday client note.

Innes noted that oil prices don't need to return to "crisis levels" to matter. Rather, crude "merely needs to remain expensive enough to prevent inflation from behaving as neatly as the Fed would like, because every extra dollar in crude now lands on a market that has suddenly rediscovered the possibility of another rate hike," he said.

The latest leg higher in oil prices on Monday comes after global crude futures fell by over 5% last week, following talks between Iran and Oman about reopening the Strait of Hormuz.

The fighting over the weekend also offset hopes for an increase in crude supply after Venezuela said the U.S. would help develop 17 oil fields containing 65 billion barrels of proven reserves.

"While the U.S.-Venezuela announcement reinforces the longer-term potential of the country's energy sector, we anticipate little immediate impact on crude oil or U.S. gasoline prices," said Ulrike Hoffmann-Burchardi, global head of equities at the UBS Chief Investment Office.

In her view, the key price drivers remain the U.S.-Iran conflict, shipping levels through the Strait of Hormuz and the broader trajectory of global energy demand.

-Isabel Wang -Steve Goldstein

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08-31-26 1547ET