Escalation of US-Iran Hostilities Pushes Crude Oil Sharply Higher
On July 17, 2026, crude oil and gasoline prices surged sharply as US-Iran hostilities escalated, with crude reaching a five-week high and gasoline a two-month high. The US launched fresh strikes against Iran for the sixth consecutive day, hitting coastal surveillance, air defense sites, and maritime assets. Iran retaliated by attacking US bases in Kuwait, Jordan, and Bahrain, damaging a desalination plant and power units. President Trump pledged to intensify bombardment until Iran stops attacks in the Strait of Hormuz, with reports of possible seizure of Iran's main oil export terminal, Kharg Island. The International Maritime Organization warned the strait is too dangerous for transit, and oil flows through the strait have slumped to about 5.5 million bpd from 9.4 million bpd. Additionally, Ukrainian drone attacks on Russian oil infrastructure have reduced Russian crude production to 2.5-year lows, further tightening global supplies. The crude crack spread rose to a record high, supporting prices.
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