Rodney Russell
Crude oil prices are climbing again, and the United States Oil Fund (AMEX:USO) is capturing that move in real time, trading at 125.51 dollars, up 1.3% on the day. The question traders keep asking, whether oil prices rise due to Iran war escalation, has a fairly direct answer this week: yes, and the mechanism is visible in shipping data, benchmark spreads and the fund's own 52 week range of 102.42 to 154.08.
| Price | 125.51 USD |
|---|---|
| Day change | +1.61 (+1.3%) |
| 52-week range | 102.42 – 154.08 |
| RSI (14) | 60.19 |
| Volume | 6,679,779 |
The proximate driver is a ninth consecutive night of US strikes against Iranian targets, met by Iranian retaliation against US allied assets scattered across the Middle East. Brent crude, the international benchmark, rose 3.2% to 90.95 dollars a barrel in the underlying physical market, while US benchmark crude added 2.8% to reach 84.04 dollars. USO, as a futures backed proxy for the domestic grade, is reflecting that same directional pressure, though its percentage move diverges somewhat from the raw barrel price given the fund's roll costs and contract structure.
Why Oil Prices Rise When the Strait of Hormuz Is at Risk
ING commodities strategists Warren Patterson and Ewa Manthey flagged the core supply risk in a note this week: tanker traffic through the Strait of Hormuz has nearly stalled. That chokepoint carries a substantial share of the world's seaborne crude and LNG, and even a partial slowdown in transit removes barrels from the water faster than alternative pipeline routes can absorb them. Patterson and Manthey warned that continued, unchecked escalation could push the region back into an environment of widespread attacks across the Persian Gulf, a scenario that would tighten physical availability well beyond what current futures pricing has absorbed.
That framing matters for anyone parsing USO's RSI of 60.19. The reading sits in bullish territory without yet flashing overbought, which suggests the market has priced in escalation risk but still has room to run if Hormuz disruptions deepen. A move toward the 52 week high of 154.08 would require either a sustained closure of shipping lanes or a broader supply shock; a retreat toward the 102.42 low would need a credible de-escalation signal, something absent so far given that Iran's supreme leader has publicly dismissed ceasefire talk as worthless.
Geopolitics, the Dollar and Cross-Asset Spillover
Crude's rally is not happening in isolation. Capital Economics chief markets economist Jonas Goltermann noted that renewed conflict risk in the Strait of Hormuz could start weighing more heavily on broader financial markets, particularly if equity investors keep discounting strong earnings against a darkening geopolitical backdrop. That dynamic was visible Friday as AI related chip stocks sold off, dragging benchmarks tracked by SPY, QQQ and DIA lower, a move compounded by profit taking after a run of outsized gains tied to AI infrastructure spending pledges.
A second AI related shock, the release of Beijing based Moonshot AI's Kimi K3 open source model, added to equity market unease by reviving memories of the DeepSeek disruption from early 2025. While that story sits in a separate corner of the market from crude, the combined effect of oil driven inflation risk and tech sector jitters tends to push capital toward traditional havens, a rotation that shows up in gold (GLD) and silver (SLV) demand and in Treasury positioning reflected through TLT. The dollar's trajectory in this mix is the swing factor: a firmer greenback caps oil's dollar denominated gains even amid supply fear, while any dollar softness would amplify the upside USO is already showing.
Inventories and the Physical Market Backdrop
Beyond the headline strikes, the physical oil market's tightness is compounding the geopolitical premium. Reduced tanker throughput at Hormuz functions like an inventory drawdown even before official stockpile data reflects it, because barrels that would normally reach refiners are sitting queued or rerouted. That lag between disruption and reported inventory change is exactly why futures and futures backed vehicles like USO tend to move faster than physical crude assessments during acute supply scares.
What Happens if the Strikes Continue
The open question is whether nightly strikes harden into a prolonged campaign or whether either side pulls back. ING's warning that the conflict could expand into widespread Gulf wide attacks is the scenario markets are now pricing partially into crude, and USO's RSI leaves room for further upside without yet signaling exhaustion.
Frequently Asked Questions
Will oil prices rise due to Iran war?
Oil prices have already risen on the conflict, with Brent up 3.2% to 90.95 dollars a barrel and US crude up 2.8% to 84.04 dollars, driven largely by disrupted tanker traffic through the Strait of Hormuz.
Will gas prices rise due to Iran war?
Retail gasoline prices typically follow crude oil with a lag of days to a few weeks, so continued crude gains stemming from the conflict would likely push pump prices higher if the strikes persist.
Will fuel prices rise due to Iran war?
Broader fuel prices, including diesel and jet fuel, tend to move in the same direction as crude oil, and the current Hormuz related supply disruption is putting upward pressure across the fuel complex, not just gasoline.
Will gas prices increase due to Iran war?
Yes, if crude oil's current gains hold or extend, gas prices are likely to increase, since refiners' input costs are rising in direct response to the Strait of Hormuz disruption tied to the conflict.
How much will gas prices rise due to Iran war?
The exact size of any gas price increase is not yet reported, since the current data reflects crude benchmarks (Brent at 90.95 dollars, US crude at 84.04 dollars) rather than pump prices, which respond with a delay and depend on regional refining and distribution factors.
The Unresolved Question Over Hormuz
Nothing about this rally resolves the underlying uncertainty: whether the Strait of Hormuz stays functionally open enough to prevent a deeper price shock. Until strikes ease or shipping traffic normalizes, USO and the broader crude complex are likely to keep trading on headline risk rather than settled fundamentals.
