Crude oil surges as US-Iran conflict escalates

Today’s headlines

What’s happening: Crude oil prices climbed this morning amid rising tensions between the US and Iran.

What happened: The conflict escalated after a US submarine sank an Iranian warship in the Indian Ocean, off the coast of Sri Lanka.

Weakness in the US dollar also provided a boost to crude oil prices.

Why it matters: On Wednesday, an Iranian warship was torpedoed by a US submarine in international waters. During a Pentagon briefing, US Defense Secretary Pete Hegseth described the strike as the “first such attack on an enemy since World War II”.

The Iranian military ship had around 180 members on board and was returning from the eastern coast of India after participating in the 2026 International Fleet Review held last month.

The US-Israeli war against Iran has entered its sixth day, with markets fearing a further escalation. Iran has claimed full control of the Strait of Hormuz, effectively halting commercial shipping through the route, and warned it would “set on fire” any ship attempting transit.

US President Donald Trump offered risk insurance and escorts by the US Navy for commercial vessels through the Strait of Hormuz, while Treasury Secretary Scott Bessent announced plans to provide support to oil tankers.

Meanwhile, data released on Wednesday showed US crude inventories rose by 3.475 million barrels to 439.3 million in the week ending February 27, compared to market estimates of 2.3 million barrels.

Weakness in the US dollar lent further support to oil prices, as a softer greenback makes commodities cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.1% to 98.71 this morning.

Spot prices for WTI crude oil gained 0.4% to trade at $75.59 a barrel, while Brent crude prices surged almost 0.6% to $82.03 a barrel this morning.

In other energy trading, gasoline prices rose 0.9% to $2.5366, while natural gas climbed 1.3% to $2.954.

What to watch: Investors will keep an eye on the ongoing US-Iran war.

Data on the EIA’s (Energy Information Administration) natural gas stockpiles (1930 UAE Time) will be released today. US natural gas inventories, which fell by 52 billion cubic feet in the week ended February 20, are expected to decline by 122 million cubic feet in the latest week.

The markets today

Broadcom in focus today after releasing its first-quarter results

Context: Shares of Broadcom rose in extended trading hours on Wednesday after the company posted better-than-expected earnings for the latest quarter.

Details: US big tech companies like Alphabet, Meta, Microsoft and Amazon are projected to spend billions of dollars to build AI infrastructure this year. This would raise the demand for chips, servers and networking equipment products from firms like Broadcom.

The chip designer’s first-quarter revenues jumped 29% year-over-year to $19.31 billion, topping consensus estimates of $19.20 billion. The company posted adjusted earnings of $2.05 per share, beating Wall Street expectations of $2.02 per share.

“Q1 AI revenue of $8.4 billion grew 106% year-over-year, above our forecast, driven by robust demand for custom AI accelerators and AI networking. Our AI revenue growth is accelerating, and we expect AI semiconductor revenue to be $10.7 billion in Q2,” CEO Hock Tan said.

Broadcom guided to fiscal second-quarter revenue of around $22 billion, above market estimates of $20.68 billion.

The company’s board announced a quarterly cash dividend of 65 cents per share and approved a new $10 billion share repurchase program.

Broadcom projected its AI chip revenue to surpass $100 billion next year, with higher demand for custom chips.

How shares responded: Broadcom’s shares climbed 5.3% to $334.25 in after-hours trading following the release of quarterly results. The stock has gained more than 69% over the past year.

What to watch: Investors will continue monitoring AI investments by the top tech companies.

Other Markets: European indices closed higher on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.80%, 1.74%, 0.79% and 1.37%, respectively.

The news shaping the markets

Russia accused Ukraine of attacking a tanker carrying liquefied natural gas, which sank in the Mediterranean. The news sent the USD/RUB pair lower in forex trading this morning.

Philippines’ annual inflation rate rose to 2.4% in February from 2% in January, lending support to the USD/PHP forex pair.

Australia’s goods trade surplus declined to A$2.63 billion in January from A$3.37 billion in the previous month. The figure missing market estimates of A$3.9 billion sent the AUD/USD pair lower in forex trading this morning.

Canada’s S&P Global services PMI climbed to 46.5 in February from 45.8 in the previous month. However, the region’s services sector remained in the contraction zone, which lent support to the USD/CAD forex pair.

Brazil’s S&P Global composite PMI surged to 51.3 in February from 49.9 in January. Renewed growth in the private sector sent the USD/BRL pair lower in forex trading this morning.

What else to watch today

Spain’s industrial production (1200 UAE Time), Eurozone’s HCOB construction PMI (1230 UAE Time), retail sales (1400 UAE Time) and ECB monetary policy meeting accounts (1630 UAE Time), France’s HCOB construction PMI (1230 UAE Time), Germany’s HCOB construction PMI (1230 UAE Time), Italy’s HCOB construction PMI (1230 UAE Time) and retail sales (1300 UAE Time), UK’s new car sales (1300 UAE Time), S&P Global construction PMI (1330 UAE Time), DMP 1Y CPI expectations (1330 UAE Time) and DMP 3M output price expectations (1330 UAE Time), Turkey’s foreign exchange reserves (1530 UAE Time), Brazil’s unemployment rate (1600 UAE Time) and balance of trade (2200 UAE Time), Mexico’s gross fixed investment (1600 UAE Time) as well as US Challenger job cuts (1630 UAE Time), export prices (1730 UAE Time), import prices (1730 UAE Time), initial jobless claims (1730 UAE Time), nonfarm productivity (1730 UAE Time), unit labour costs (1730 UAE Time) and continuing jobless claims (1730 UAE Time).