Oil Prices Surge as US-Iran Tensions Flare in Strait of Hormuz

The US and Iran traded fire in the Strait of Hormuz late Thursday after three US Navy destroyers came under attack from Iranian missiles and drones, prompting American forces to launch "self-defense" strikes against Iranian military facilities , according to US Central Command. The USS Truxtun, USS Rafael Peralta, and USS Mason were transiting the strait when Iranian forces launched the attack , with no US assets struck , CENTCOM reported.

Both sides claimed the other initiated the confrontation , according to CNBC. President Trump reportedly called the strikes "just a love tap" and said the ceasefire remains in effect, though the ceasefire began on April 8 as a two-week temporary truce and was unilaterally extended by Trump . The incident marks the most serious confrontation since the ceasefire took effect in early April , OilPrice.com reported.

Oil prices reacted sharply to the news. At the time of writing, Brent crude had climbed 2.64% to $102.70 per barrel, while West Texas Intermediate was trading 1.95% higher at $96.66 , OilPrice.com reported Friday morning. According to market data, WTI crude currently trades at $71.50 per barrel and Brent at $75.20, though by 8:45 a.m. Eastern Time on May 7, oil had reached $100.45 per barrel using the Brent benchmark , Fortune reported. No ships transited the strait Thursday, the second day in a row that the critical waterway has had no traffic at all , according to S&P Global Market Intelligence cited by NBC News.

Nvidia Bets $2.1 Billion on AI Infrastructure Buildout

In a deal that underscores the energy-intensive nature of artificial intelligence, Nvidia and IREN Limited announced a strategic partnership to accelerate deployment of up to 5 gigawatts of NVIDIA DSX-aligned AI infrastructure across IREN's global data center pipeline , the companies said Thursday. As part of the partnership, IREN issued to NVIDIA a five-year right to purchase up to 30 million shares of ordinary stock at an exercise price of $70 per share, resulting in a right to invest up to $2.1 billion , according to Nvidia's announcement.

"AI factories are becoming foundational infrastructure for the global economy," said Jensen Huang, founder and CEO of NVIDIA, adding that "deploying these systems at scale requires deep integration across the full stack — compute, networking, software, power and operations" . Future deployments are expected to focus on IREN's 2-gigawatt Sweetwater campus in Texas , which the companies expect to serve as a flagship deployment for NVIDIA's DSX architecture.

IREN shares climbed to around 27% as the news broke, then retreated and settled up about 6% , CNBC reported. In a separate release, IREN said it signed a five-year deal worth $3.4 billion to provide Nvidia with access to managed GPU cloud services for its internal AI and research workloads, with deployment at IREN's existing data centers in Childress, Texas .

Venezuela's Oil Comeback Accelerates Under US Oversight

Venezuela's oil exports climbed sharply in April, reaching 1.23 million barrels per day, marking the highest monthly level since 2018 as shipments to key markets accelerated, representing a 14% rise from March , according to shipping data and PDVSA documents reported by Oil & Gas Advancement. Since the January capture of Nicolas Maduro and the installation of an interim government, Washington has eased sanctions and assumed control over Venezuelan oil sales, reopening access for trading houses and joint-venture partners, including Chevron .

Sales under a flagship oil supply agreement between Venezuela and the US are expected to reach $2 billion by the end of February, US Secretary of Energy Chris Wright told reporters in Texas , EnergyNow reported. Trading houses Vitol and Trafigura have been marketing and trading the lion's share of the OPEC country's oil under the pact, while partners of Venezuela's state oil company PDVSA, particularly Chevron, are boosting output and shipments .

Shipments to the United States are increasing again, with Chevron already importing Venezuelan crude into Gulf Coast refineries designed for heavy grades, while India is also expanding its intake , the report noted. Agreements signed this week with US firms Hunt Overseas and Crossover Energy are targeting the Orinoco Belt, Venezuela's primary heavy crude region, while European majors, including Eni, Repsol, and BP, are either expanding or evaluating their positions .

Brazil Emerges as Asia's Emergency Supplier

With the Strait of Hormuz disrupted, Brazil's share of China's imports jumped from 10% in January to 18% in April , OilPrice.com reported. China imported a record volume of oil from Brazil in March, boosting Brazilian exports to the second highest level in the historical series, with the Asian country buying 1.6 million barrels per day of Brazilian oil last month, equivalent to 67% of all Brazilian exports , according to Reuters cited by Brazil Energy Insight.

Brazil has the production base to make its Asian pivot viable, with domestic crude output reaching around 4.24 million barrels per day in March, up about 15% year-on-year from 3.6 million bpd in March 2025, with state-owned Petrobras alone reporting total oil production of about 3.73 million bpd . Petrobras fully shifted its focus on Asia and reported early May that it had cut crude exports to the US to zero from around 60,000 bpd in March .

"The increase in exports was already expected, as the closure of the Strait of Hormuz resulted in an intense search by importing countries for products supplied by other origins, finding in the Brazilian market part of the supply lost in the Middle East," stated Bruno Cordeiro, Market Intelligence Analyst at StoneX . Tupi and Buzios, Brazil's two key export grades, are around 30 and 28 degrees API, respectively, with a low sulphur content—medium-sweet crudes close enough to some of the Gulf barrels Asia has lost .

The main constraint is distance: Brazil can replace part of the lost supply, but a 50-day voyage to Asia keeps freight costs at the centre of the trade , the OilPrice.com analysis noted.

What It Means for Markets

Crude oil and petroleum product prices increased significantly in the first quarter of 2026, particularly following military action in the Middle East on February 28 and the subsequent de facto closure of the Strait of Hormuz, with the front-month futures price of Brent crude oil finishing the quarter at $118 per barrel after beginning the year at $61, representing the largest price increase during a quarter on an inflation-adjusted basis in data going back to 1988 , the US Energy Information Administration reported.

The combination of geopolitical risk, AI-driven energy demand, and shifting supply chains is creating a volatile environment for energy markets. Around 23,000 seafarers remain stranded in the Persian Gulf, and despite easing tensions, supply disruptions and high energy costs continue to weigh on global demand, with shipping flows likely to take weeks to normalize , according to Trading Economics.

For now, markets are watching whether Thursday's exchange of fire marks a temporary flare-up or signals deeper trouble ahead for the fragile ceasefire that has held—barely—for the past month.