West Texas Intermediate advanced during the Asian session on Thursday, recovering much of the previous day’s decline and rebounding from its lowest level since April 21. The benchmark U.S. crude price briefly reached a new intraday high and was trying to move back above $91 as traders assessed the risk of a wider escalation in the Middle East.
The move was supported by reports of fresh U.S. strikes on an Iranian military site overnight. U.S. officials viewed the target as a potential threat to American forces and commercial shipping in the Strait of Hormuz. In response, Iran’s Islamic Revolutionary Guard Corps said it had targeted a U.S. airbase and warned that additional American attacks would be met with a stronger response. That exchange helped keep a geopolitical risk premium embedded in oil prices.
Sentiment was also pressured by remarks from President Donald Trump, who indicated that he was not satisfied with the terms of the proposed deal with Iran and did not want to be rushed into an agreement. Those comments weakened expectations for a near-term diplomatic breakthrough in a conflict that has already lasted several months. At the same time, shipping activity through the Strait of Hormuz remained constrained by Iranian restrictions and the U.S. naval blockade of Iranian ports.
Fundamentals in the physical market added further support. Data from the American Petroleum Institute showed that U.S. crude inventories declined for a sixth consecutive week, reinforcing the view that supplies remain tight. That combination of lower stocks and elevated regional tensions has helped keep the short-term outlook for oil constructive.
Even so, further gains may be limited if demand for the U.S. dollar continues to firm, since a stronger currency typically weighs on dollar-priced commodities. Market participants are now looking to the U.S. Personal Consumption Expenditures price index and the preliminary estimate of first-quarter GDP for clues on inflation and growth later in the North American session.The EURO slipped to around 1.1590 against the US dollar in Asian trading on Thursday as a renewed escalation in the Middle East prompted investors to move away from risk-sensitive assets. The decline came after reports of Iranian retaliation near Bandar Abbas, adding to concerns that the confrontation could broaden further.
Risk aversion was evident across financial markets. S&P 500 futures fell about 0.3%, while the dollar strengthened, with the US Dollar Index rising more than 0.3% to near 99.53. The move reflected a broad shift toward safer assets as traders reassessed the outlook for geopolitical stability.
Reports from Iranian media said explosions were heard east of Bandar Abbas and that air defenses were activated for several minutes. Iran’s Revolutionary Guard also said it had struck US military bases and warned of a stronger response if the US launches further attacks. The exchange has weakened confidence that the standoff can be contained quickly.
Market participants had previously taken a more constructive view after US officials, including President Donald Trump, signaled that a deal could be reached soon. That optimism has now been undermined by the latest developments, leaving investors less willing to price in a near-term de-escalation.
Attention now turns to a series of inflation releases that could influence currency trading later in the week. In the US, the April personal consumption expenditures price index is due on Thursday and is likely to shape expectations for Federal Reserve policy. In Europe, the preliminary German harmonized index of consumer prices for May will follow on Friday and may offer fresh insight into the inflation backdrop in the eurozone’s largest economy.
