• Iran launched ballistic missiles at US forces overnight, with the US and Saudi Arabia retaliating against Iran-backed militias in Iraq.
  • Oil prices jumped nearly 4%, with Brent crude rising to around $87 a barrel, as supply disruptions mount.
  • The Strait of Hormuz remains effectively closed, and Houthi attacks in the Red Sea compound shipping risks.

Overnight Strikes Intensify

Fighting between Iran and the US intensified dramatically overnight as Iran fired ballistic missiles at American forces, according to people familiar with the matter. The US and Saudi Arabia struck back with attacks on Iran-backed militias in Iraq, ending a brief diplomatic pause. Saudi Arabia said it intercepted drones targeting its oil facilities for a second consecutive day, while the US reported that all Iranian missiles aimed at its forces were intercepted. The widening conflict now spans Iran, Iraq, Saudi Arabia and Yemen, raising fears of a broader regional war.

Oil Markets React

Oil prices surged nearly 4% in early trading, with Brent crude hitting around $87 a barrel, as traders priced in renewed supply concerns. The Strait of Hormuz, a critical chokepoint for global oil shipments, remains effectively closed, with shipping heavily disrupted. Tensions are also rising in the Red Sea after attacks by Iran-backed Houthi rebels, compounding risks to maritime trade. “The market is pricing in a significant risk premium,” said one analyst, speaking on condition of anonymity. “Without a de-escalation, we could see prices push higher.”

Diplomatic Hopes Fade

Hopes for renewed US-Iran peace talks continue to fade as the conflict escalates. Efforts to broker a ceasefire have hit a snag, with both sides insisting on preconditions. “We reached out to both parties for comment but did not receive an immediate response,” a spokesperson said. The breakdown in diplomacy has left markets increasingly focused on energy security and inflation risks. The potential economic fallout could be severe, with central banks already grappling with elevated price pressures.

Regional Fallout

The strikes mark a significant escalation in the Middle East, with Iran and the US locked in a cycle of retaliation. Saudi Arabia’s involvement underscores the regional stakes, as the kingdom seeks to protect its oil infrastructure. The Houthi attacks in the Red Sea add another layer of complexity, threatening one of the world’s busiest shipping lanes. “This is a multi-front conflict,” said a regional security expert. “The risk of miscalculation is high.”

Correction: A previous version of this article misstated the number of consecutive days of drone interceptions. It has been corrected to two days.