Trump Authorizes Military Strikes Against Iran as Middle East Tensions Disrupt Oil Markets

A 17-day conflict between the United States and Iran has severely disrupted global energy markets and diplomatic relations. Donald Trump authorized military strikes against Iranian military sites on Kharg Island and claimed the U.S. has "decimated Iran's Military." In response, Iran launched missile attacks against Israel, Qatar, Saudi Arabia, and the United Arab Emirates, killing two people near Tel Aviv and setting a UAE natural gas field ablaze. Israel further escalated the conflict by claiming to have killed Iranian security chief Ali Larijani, prompting wide-scale Israeli strikes in Tehran and Lebanon.

Central to the crisis is the Strait of Hormuz, where Iran nearly halted traffic to retaliate against U.S. and Israeli attacks. While the U.S. Treasury Department briefly authorized Iranian tankers to transit to maintain global supplies, the waterway remains largely closed to U.S.-linked vessels. President Trump demanded that NATO and other allies provide naval escorts, though Japanese Prime Minister Sanae Takaichi noted such a move would be "legally difficult."

Economic fallout includes oil prices peaking above $105 per barrel before retreating as the International Energy Agency released 400 million barrels from emergency stockpiles. In the U.S., the Federal Reserve kept interest rates steady, with Chair Jerome Powell citing uncertainty regarding oil prices and tariffs. Despite the instability, markets saw periodic rallies driven by AI optimism, fueled by Nvidia CEO Jensen Huang's projection of $1 trillion in chip demand through 2027. Diplomatic tensions also extended to East Asia, as President Trump delayed a high-stakes visit to China by one month due to the conflict.