Volatility in crude markets surged after US and Iran exchanged retaliatory strikes before diplomatic signals eased tensions.
Oil prices experienced extreme volatility Thursday as US-Iran tensions escalated and then abruptly shifted toward diplomacy. The conflict intensified after Iran downed a US Army helicopter near the Strait of Hormuz earlier this week, prompting retaliatory strikes from both sides over the following days.
On Tuesday and Wednesday, US forces targeted Iranian positions, while Tehran responded in kind. Early Thursday, President Trump threatened to seize Kharg Island, a critical hub for Iranian crude exports, before diplomatic overtures emerged later in the day.
The rapid shifts in rhetoric drove sharp fluctuations in energy markets, with traders reacting to each development in the standoff. Prior to the latest escalation, oil prices had stabilized following weeks of relative calm in the region.