Escalating military rhetoric between the United States and Iran rattled global markets on Wednesday, sending crude oil prices sharply higher while risk assets like Bitcoin retreated. President Donald Trump signaled the possibility of further strikes against Iran, stoking fears of supply disruptions through the strategic Strait of Hormuz.
Oil Surges on Supply Disruption Fears
Brent crude jumped approximately 5.5% to $78.25 a barrel, while US West Texas Intermediate rose 4.7% to $73.75, putting both benchmarks on track for their largest daily percentage gains since April. The rally intensified after Trump suggested the US could reimpose a blockade on Iranian ports and following overnight strikes that hit more than 80 targets across Iran, including air defense systems and coastal radar sites.
Iran responded by warning of an “immediate response” and stating that US military action had rendered the interim peace agreement ineffective. The Revolutionary Guard Corps later claimed it had targeted US military bases in Bahrain and Kuwait. The Strait of Hormuz, through which roughly one-fifth of global oil supplies transit, remains a key flashpoint.
Additional upward pressure came from Russia’s announcement of a ban on diesel exports after Ukrainian drone attacks on Russian refineries and pipeline infrastructure. US ultra-low sulfur diesel futures surged more than 14%, and refining margins hit record highs, according to LSEG data.
Gold Falls as Inflation Worries Trump Safe-Haven Demand
Despite heightened geopolitical tensions, spot gold declined 0.66% to $4,078.73 an ounce, while August gold futures settled 1.4% lower at $4,097.20. Investors focused on the inflationary impact of rising energy costs, which strengthened expectations that the Federal Reserve may keep interest rates higher for longer. Higher rates reduce the appeal of non-yielding assets like gold.
The drop followed the release of Fed minutes showing policymakers remained concerned about inflation, with some officials seeing a case for additional rate hikes. CME FedWatch data now shows traders pricing in about a 69% probability of a US rate hike in September, up from 62% a day earlier.
Bitcoin Slides as Traders Reduce Risk Exposure
Bitcoin traded above $62,000 but declined nearly 2% over the past 24 hours as investors cut exposure to risk assets amid geopolitical uncertainty and weakness in AI-related technology stocks. Market data showed a shift from aggressive buying earlier in the week to widespread selling on Wednesday.
Futures cumulative volume delta swung to nearly $500 million in selling, while spot markets recorded approximately $86 million in net selling. Funding rates and open interest also declined as traders reduced positions, though funding remained positive over the past week. Liquidation data revealed forced selling concentrated on long positions, with roughly $47 million in long liquidations compared with about $4 million in short liquidations.
Analysts noted that a large concentration of long positions remains near the $61,000 level, which could increase selling pressure if Bitcoin falls further. For more on Bitcoin’s reaction to the tensions, see Bitcoin Slips Below $63K as Iran Tensions Rekindle $60K Support Test.
Broader Market Impact
The geopolitical jitters also weighed on equity markets, with the Dow dropping 253 points as chip profit-taking and US-Iran tensions rattled investors. For a detailed look at the equity market reaction, read Dow Drops 253 Points as Chip Profit-Taking and US-Iran Tensions Rattle Markets.
This article is for informational purposes only and does not constitute financial advice.
